Registration No. 33-
As filed with the Securities and Exchange Commission on July 8, 1997
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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CARDINAL REALTY SERVICES, INC.
(Exact Name of Registrant as Specified in its Charter)
OHIO 31-4427382
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
6954 AMERICANA PARKWAY
REYNOLDSBURG, OHIO 43068
(Address of Principal Executive Offices Including Zip Code)
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AMENDED AND RESTATED 1992 INCENTIVE EQUITY PLAN OF
CARDINAL REALTY SERVICES, INC.,
NON-EMPLOYEE DIRECTOR RESTRICTED STOCK PLAN,
EMPLOYMENT AGREEMENTS AND AWARD AGREEMENTS BETWEEN
THE COMPANY AND EACH OF JOHN B. BARTLING, JR.,
MARK D. THOMPSON, PAUL R. SELID, JAMES D. ALEXANDER AND LESLIE B. FOX
SUPPLEMENTAL LETTER TO EMPLOYMENT AGREEMENT OF
PATRICK M. HOLDER BETWEEN THE COMPANY AND MR. HOLDER,
AWARD AGREEMENTS BETWEEN THE COMPANY AND JOSEPH E. MADIGAN
AND AWARD AGREEMENTS BETWEEN THE COMPANY AND
RONALD P. KOEGLER AND MICHELE R. SOUDER
(Full Title of the Plans)
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COPY TO:
JEFFREY D. MEYER BRADLEY A. VAN AUKEN
CARDINAL REALTY SERVICES, INC. BENESCH, FRIEDLANDER, COPLAN & ARONOFF LLP
6954 AMERICANA PARKWAY 2300 BP AMERICA BUILDING
REYNOLDSBURG, OHIO 43068 200 PUBLIC SQUARE
(614) 759-1566 CLEVELAND, OHIO 44114-2378
(216) 363-4500
(Name and Address Including Zip Code; and Telephone Number,
Including Area Code, of Agent for Service)
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: __
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box: |X|
CALCULATION OF REGISTRATION FEE
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TITLE OF | AMOUNT |PROPOSED MAXIMUM|PROPOSED MAXIMUM | AMOUNT OF |
SECURITIES | TO BE | OFFERING PRICE | AGGREGATE |REGISTRATION|
TO BE REGISTERED |REGISTERED 1 | PER SHARE 2 |OFFERING PRICE 2 | FEE |
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COMMON STOCK, | 440,218 | VARIABLE | $ 10,400,150 |$ 3,151.56 |
WITHOUT PAR VALUE| SHARES | | | |
=================|=============|================|=================|=============
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1 THIS REGISTRATION STATEMENT ALSO INCLUDES AN INDETERMINABLE NUMBER OF
SHARES OF COMMON STOCK WHICH MAY BE ISSUED UNDER THE ANTI-DILUTION
PROVISIONS OF THE PLANS.
2 ESTIMATED IN ACCORDANCE WITH RULE 457 UNDER THE SECURITIES ACT OF 1933,
SOLELY FOR THE PURPOSE OF CALCULATING THE REGISTRATION FEE, ON THE BASIS
OF (A) THE AVERAGE PRICE AT WHICH EXISTING OPTIONS MAY BE EXERCISED OR (B)
THE AVERAGE OF THE HIGH AND LOW PRICES OF THE COMMON STOCK ON JULY 1,
1997 AS REPORTED ON THE NASDAQ NATIONAL MARKET SYSTEM WITH RESPECT TO ALL
OTHER SHARES OF COMMON STOCK.
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2
This Registration Statement registers shares of Common Stock, without
par value, of Cardinal Realty Services, Inc. (the "Company") 250,000 of which
have been issued by the Company under the Amended and Restated 1992 Incentive
Equity Plan of Cardinal Realty Services, Inc. (the "Incentive Equity Plan"),
50,000 of which are to be issued under the Non-Employee Director Restricted
Stock Plan (the "Director Plan"), 127,834 of which are to be issued pursuant to
the Employment and Award Agreements between the Company and each of John B.
Bartling, Jr., Mark D. Thompson, Paul R. Selid, James D. Alexander and Leslie B.
Fox (the "Employment Agreements"), 7,159 of which may be issued pursuant to the
Supplemental Letter to the Employment Agreement of Patrick M. Holder between the
Company and Mr. Holder (the "Letter Agreement"), 4,000 of which are to be issued
under Restricted Stock Award Agreements between the Company and Joseph E.
Madigan (the "Award Agreements") and 1,225 which are to be issued under Award
Agreements between the Company and Ronald P. Koegler and Michele R. Souder. The
securities registered on this Registration Statement which are to be issued
under the Incentive Equity Plan are in addition to those securities for which a
Registration Statement on Form S-8 filed March 9, 1995, Registration No.
33-90184, is effective relating to the Incentive Equity Plan.
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PART I
REOFFER PROSPECTUS
(SUPPLEMENT)
194,646 SHARES
CARDINAL REALTY SERVICES, INC.
COMMON STOCK
This Reoffer Prospectus (Supplement) supplements the Reoffer Prospectus
dated March 8, 1995 originally filed with the Registration Statement of Cardinal
Realty Services, Inc. (together with its subsidiaries where the context
requires, the "Company") filed with the Securities and Exchange Commission on
March 9, 1995 (the "Prospectus"). The shares of Common Stock, without par value
("Common Stock"), of the Company, offered pursuant to this Prospectus consist of
194,646 shares (the "Shares") which eventually may be offered for sale by
certain holders of Common Stock (the "Selling Shareholders"). The Company has
agreed to pay all of the expenses of this offering, but will not receive any of
the proceeds from the sale of the Shares by the Selling Shareholders. See
"Selling Shareholders." All brokerage commissions and other similar expenses
incurred by the Selling Shareholders will be borne by the Selling Shareholders.
The aggregate proceeds to the Selling Shareholders from the sale of the Shares
will be the purchase price of the Shares sold, less the aggregate agents'
commissions and underwriters' discounts, if any, and other expenses of issuance
and distribution not borne by the Company. See "Use of Proceeds" and "Plan of
Distribution."
The Common Stock is listed on the NASDAQ National Market System under
the symbol "CRSI." On July 1, 1997, the last reported high and low bid prices
of the Common Stock were $24.00 per share and $23.25 per share, respectively.
The Selling Shareholders directly, through agents designated from time
to time, or through dealers or underwriters also to be designated, may sell the
Shares from time to time on terms to be determined at the time of sale. The
Selling Shareholders may sell the Shares in one or more transactions (which may
involve one or more block transactions) on the NASDAQ National Market System, in
sales occurring in the over-the-counter market, in privately negotiated
transactions, or in a combination of such transactions; each sale may be made
either at market prices prevailing at the time of such sale or at negotiated
prices; some or all of the Shares may be sold through brokers acting on behalf
of the Selling Shareholders or to dealers for resale by such dealers; and in
connection with such sales, such brokers or dealers may receive compensation in
the form of discounts, fees or commissions from the Selling Shareholders and/or
the purchasers of such Shares for whom they may act as broker or agent. To the
extent required, the specific Shares to be sold, the names of the Selling
Shareholders, the purchase price, the public offering price, the names of any
such agents, dealers or underwriters and any applicable commissions or discounts
with respect to a particular offer will be set forth in an accompanying
Prospectus Supplement.
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The Selling Shareholders and any broker-dealers, agents or underwriters
that participate with the Selling Shareholders in the distribution of the Shares
may be deemed to be "underwriters" within the meaning of the Securities Act of
1933, as amended (the "1933 Act"), and any commissions received by them and any
profit on the resale of the Shares purchased by them may be deemed to be
underwriting commissions or discounts under the 1933 Act.
No dealer, salesman or other person is authorized to give any
information or to make any representations other than those contained or
incorporated by reference in this Prospectus and, if given or made, such
information or representation must not be relied upon as having been authorized
by the Company or the Selling Shareholders, or any underwriter, dealer or agent.
This Prospectus and any supplement thereto shall not constitute an offer to
sell, or the solicitation of an offer to buy, any of the Shares offered hereby
in any jurisdiction where, or to any person to whom, it is unlawful to make such
offer or solicitation. Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create an implication that there has
been no change in the affairs of the Company since the date hereof or thereof,
or that the information contained herein is correct as of any time subsequent to
the date hereof.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION")
OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is July 8, 1997.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports and other information with the Commission. In
addition, the Company has filed with the Commission a Form S-8 Registration
Statement with respect to the Company's 1992 Incentive Equity Plan and Employee
Stock Purchase Plan on March 8, 1995 which registered certain of the Shares
offered hereby (the "Registration Statement"). This Prospectus does not contain
all the information set forth in the Registration Statement and the exhibits and
schedules relating thereto. For further information with respect to the Company
and the Shares offered hereby, reference is made to the Registration Statement
and the exhibits and schedules thereto, and to the reports and other information
filed with the Commission. Statements contained in this Prospectus as to the
contents of any contract or other document referred to herein are not
necessarily complete and reference is made to the copy of such contract or other
document filed as an exhibit to the Registration Statement of which this
Prospectus forms a part, each such statement being qualified in all respects by
such reference. The Registration Statement, and the exhibits and schedules
thereto, and reports and other information filed with the Commission may be
inspected and copied (at the prescribed rates) at the public reference
facilities maintained by the Commission located at 450 Fifth Street, N.W., Room
1024, Washington, D.C. 20549, and at the regional offices of the Commission
located at 7 World Trade Center, New York, New York 10048 and at 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can
be obtained from the Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents, each as filed by the Company with the
Commission pursuant to the Exchange Act, are incorporated herein by reference:
(a) the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996 filed with the Commission on March 31,
1997 (File No. 0-21670) as amended on Form 10-K/A filed with the
Commission on April 14, 1997;
(b) the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 1997 filed with the Commission on May 13, 1997
(File No. 0-21670); and
(c) the description of the Company's Common Stock contained in
its Registration Statement on Form 10, filed with the Commission on
April 30, 1993, as amended on Form 10/A filed with the Commission on
June 25, 1993, Form 10/A (Amendment No. 2) filed with the Commission on
July 26, 1993, and Form 10/A (Amendment No. 3) filed with the
Commission on August 10, 1993.
All documents concurrently or subsequently filed by the Company
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the 1934 Act, prior to the
termination of this offering, shall be deemed
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incorporated by reference in the Prospectus and to be a part hereof from the
respective date of filing each such document. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company will provide, without charge, to each person to whom this
Prospectus is delivered, on the request of such person, a copy of any document
incorporated by reference herein (other than exhibits to such documents, unless
they are specifically incorporated by reference herein). Requests for such
documents should be directed to Cardinal Realty Services, Inc., 6954 Americana
Parkway, Reynoldsburg, Ohio 43068, Attention: Jeffrey D. Meyer, or made by
telephone at (614) 759-1566.
THE COMPANY
Cardinal Realty Services, Inc., a corporation organized under Ohio law,
together with its subsidiaries, provides real estate services and has
substantial real estate holdings in one of the largest multi-family real estate
portfolios in the United States. The Company is associated in an ownership
capacity with over 34,000 apartment units in 15 states in the eastern region of
the United States. In addition, the Company is associated in a management
capacity with substantially all such apartment units in which it maintains an
ownership interest and with an additional 21,000 apartment units, principally in
nine western states.
The Company's principal executive offices are located at 6954 Americana
Parkway, Reynoldsburg, Ohio 43068 (telephone: (614) 759-1566). The Company's
operations are highly centralized. In addition, the Company employs regional and
district managers and resident property managers in real estate management
functions.
USE OF PROCEEDS
The Shares being offered are for the account of the Selling
Shareholders. Accordingly, the Company will receive none of the proceeds from
the sale of the Shares.
SELLING SHAREHOLDERS
The following table sets forth as of June 30, 1997, certain information
with respect to each of the Selling Shareholders, provided by said Selling
Shareholder, including the name and position with the Company, if any, of each
of the Selling Shareholders and the number of Shares that may be offered by
each. The number of Shares which actually may be sold by each of the Selling
Shareholders will be determined from time to time by each Selling Shareholder
and may depend
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upon a number of factors, including the price of the Common Stock from time to
time. Because each of the Selling Shareholders may offer all, some or none of
the Shares that each holds, and because the offering contemplated by this
Prospectus is not being underwritten on a firm commitment basis, no estimate can
be given as to the number of Shares that will be held by each of the Selling
Shareholders upon or prior to termination of this offering. It is anticipated
that the Selling Shareholders may eventually offer all of the Shares for sale.
See "Plan of Distribution."
As noted in the footnotes to the table, the final determination as to
the number of Shares of Common Stock that certain of the Selling Shareholders
received was dependent on the Company's Total Committed Equity (as defined in
the Incentive Equity Plan), which was determined upon the completion of the Plan
of Reorganization claims process. The process of settling the claims (as defined
in Section 101(5) of the Bankruptcy Code, "Claims") of unsecured creditors has
been a major undertaking for the Company since approximately 12,180 Claims were
filed for an aggregate of $2.57 billion. The Plan of Reorganization authorized
the payment of one share of Common Stock for each $50 of Allowed Claims (as
defined in the Plan of Reorganization). On March 15, 1996, the Company filed its
final post-confirmation report with the United States Bankruptcy Court for the
Southern District of Ohio, Eastern Division (the "Bankruptcy Court") regarding
the consolidated cases (In re Cardinal Industries, Inc. et al., Case No.
2-89-02779 in the Bankruptcy Court) and completed service to nearly 30,000
parties in interest of the Bankruptcy Court's order proposing to close those
cases. On November 25, 1996 the final decree closing the consolidated cases was
entered.
On June 1, 1997, the Company had outstanding 4,486,592 shares of Common
Stock (the number upon which the percentages in the table below are based).
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| Number of Shares of |
Name of Selling | Common Stock Owned or |
Shareholder and | Deemed to be Owned by | Shares of Common Stock
Position | Selling Shareholder | Offered Hereby
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| Shares % of Class (1)| Shares % of Class
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Joseph E. Madigan | 15,066(2) * | 4,316 *
Chairman of the Board | |
| |
John B. Bartling, Jr. | 65,440(3) 1.46% | 60,440 *
President and Chief | |
Executive Officer | |
| |
Mark D. Thompson | 33,545(4) * | 28,545 *
Executive Vice | |
President | |
| |
Leslie B. Fox | 16,500(5) * | 16,500 *
Executive Vice | |
President | |
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| Number of Shares of |
Name of Selling | Common Stock Owned or |
Shareholder and | Deemed to be Owned by | Shares of Common Stock
Position | Selling Shareholder | Offered Hereby
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| Shares % of Class (1)| Shares % of Class
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Paul R. Selid | 19,372(6) * | 15,622 *
Senior Vice President | |
| |
James D. Alexander | 5,000(7) * | 5,000 *
Vice President of | |
Lexford | |
Properties, Inc. | |
| |
Robert V. Gothier, Sr. | 14,533(8) * | 1,108 *
Director | |
| |
George J. Neilan | 11,085(9) * | 605 *
Director | |
| |
George R. Oberer, Sr. | 32,063(10) * | 1,525 *
Director | |
| |
Glenn C. Pollack | 14,786(11) * | 1,536 *
Director | |
| |
H. Jeffrey Schwartz | 22,475(12) * | 1,725 *
Director | |
| |
Gerald E. Wedren | 11,556(13) * | 806 *
Director | |
| |
Robert J. Weiler | 47,937(14) 1.07% | 1,187 *
Director | |
| |
Thomas Trubiana | 42,830(15) * | 31,680 *
Vice President | |
| |
Ronald P. Koegler | 7,020(16) * | 5,322 *
Vice President and | |
Controller | |
| |
Michele R. Souder | 4,372(17) * | 4,370 *
Vice President | |
| |
Tom Clark** | 7,723(18) * | 6,010 *
| |
Tom Russell** | 9,668(19) * | 3,345 *
| |
Steve Lavery** | 1,463(20) * | 1,005 *
| |
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| Number of Shares of |
Name of Selling | Common Stock Owned or |
Shareholder and | Deemed to be Owned by | Shares of Common Stock
Position | Selling Shareholder | Offered Hereby
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| Shares % of Class (1)| Shares % of Class
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Dain C. Akin | 4,453(21) * | 1,500 *
Vice President | |
| |
Tamra L. Potts | 3,689(22) * | 1,000 *
Vice President | |
| |
Alan Litzelfelner** | 698(23) * | 333 *
| |
Jessica Martin** | 500(24) * | 500 *
| |
Bob Schaefer** | 397(25) * | 166 *
| |
Bonita Davis** | 1,541(26) * | 500 *
========================|===========================|===========================
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* Less than one percent (1%).
** Denotes key employee status.
(1) The determination as to the number of Shares of Common Stock that
certain of the Selling Shareholders received was dependent on the
Company's Total Committed Equity (as defined in the Incentive Equity
Plan), which was determined upon the completion of the Plan of
Reorganization claims process. As to certain of the Selling
Shareholders, the number of shares of Common Stock owned and, as to
each Selling Shareholder, the percentage of Common Stock indicated in
the table are estimates based on 4,486,592 outstanding shares of Common
Stock.
(2) Mr. Madigan received an award of restricted Common Stock on December 1,
1995 and December 1, 1996 (the "1996 Award"), each in the amount of
2,000 shares. All of the shares of Restricted Stock granted under Mr.
Madigan's 1996 award were issued to The Provident Bank, a state
chartered bank, as trustee ("Trustee") of the Cardinal Realty Services,
Inc. Executive Deferred Compensation Rabbi Trust for the benefit of Mr.
Madigan pursuant to the Executive Deferred Compensation Plan and
Executive Deferred Compensation Rabbi Trust Agreement. As a
non-employee director of the Company, Mr. Madigan was granted a stock
option to purchase that number of shares of Common Stock equal to
0.1875% of the Company's Total Committed Equity (7,500 shares of Common
Stock) on September 11, 1992. The options are exercisable to the extent
of 10% of the shares of Common Stock covered by the grant after Mr.
Madigan has served continuously as a director of the Company for six
months and to the extent of an additional 10% of such shares after each
of the next nine successive six month periods of continuous service;
therefore, 6,750 shares, as of March 11, 1997, of Common Stock
underlying this stock option are attributable to Mr. Madigan, because
he has the immediate vested right to acquire such shares based on the
commencement of his term as a director on September 11, 1992. In
addition, on November 30, 1995, Mr. Madigan was granted an option to
purchase 2,000 shares of Common Stock, with an exercise price equal to
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$17.25 which options are fully vested. On May 23, 1996, Mr. Madigan was
granted an option to purchase an additional 2,000 shares of Common
Stock, with an exercise price of $21.25, which options are also fully
vested. Mr. Madigan also received 316 shares of Restricted Stock
pursuant to his participation in the Company's Non-Employee Director
Restricted Stock Plan.
(3) Mr. Bartling, on April 15, 1996, pursuant to the terms of his
Employment Agreement, as amended, with the Company, received an award
of 22,500 shares of Restricted Stock under the Incentive Equity Plan,
one-third of which vests on each of the third, fourth and fifth
anniversaries of the date of grant. In addition, Mr. Bartling, on April
5, 1996, received an award of 20,000 shares of Restricted Stock
pursuant to the terms of his Employment Agreement, as amended, with the
Company, the vesting of which is contingent upon the Company achieving
certain market capitalization targets. In addition, Mr. Bartling's
Employment Agreement, as amended, with the Company provides Mr.
Bartling with a right to receive up to 10,000 shares of Restricted
Stock in the event Mr. Bartling purchases an equal number of shares of
Common Stock. Mr. Bartling purchased 5,000 shares of Common Stock and
was permitted to use a portion of his cash bonus for the 1996 fiscal
year to purchase the remaining 5,000 shares of Common Stock to satisfy
such matching purchase. All of the shares of Restricted Stock granted
under Mr. Bartling's Employment Agreement, as amended, are, or will be
issued to the Trustee of the Cardinal Realty Services, Inc. Executive
Deferred Compensation Rabbi Trust for the benefit of Mr. Bartling
pursuant to the Executive Deferred Compensation Plan and Executive
Deferred Compensation Rabbi Trust Agreement. Mr. Bartling, on April 15,
1996, pursuant to the terms of his Employment Agreement, as amended,
was also granted an option to purchase 20,000 shares of Common Stock at
an exercise price of $17.825 per share, one-fourth of which vests on
the second, third, fourth and fifth anniversaries of the date of grant.
Mr. Bartling also received an award of 1,940 shares of Common Stock
issued to the Trustee for Mr. Bartling's benefit as a stock bonus for
1996 granted in 1997. The table includes 1,000 shares which have been,
or will be, issued to the Trustee for Mr. Bartling's benefit as part of
his annual base compensation in lieu of cash compensation for the first
and second quarters of fiscal 1997. This table does not include 1,000
shares which will be issued to the Trustee for Mr. Bartling's benefit
as part of his annual base compensation in lieu of cash compensation
for the third and fourth quarters of fiscal 1997.
(4) Mr. Thompson, on April 15, 1996, received an award of 7,500 Shares of
Restricted Stock, one-third of which vests on each of the third, fourth
and fifth anniversaries of the date of grant pursuant to the terms of
his Employment Agreement, as amended, with the Company. In addition,
pursuant to the terms of his Employment Agreement, as amended, with the
Company, Mr. Thompson, on April 15, 1996, received an award of 9,000
Shares of Restricted Stock, which vesting is contingent upon the
Company achieving certain market capitalization targets. As further
provided under his Employment Agreement, as amended, with the Company,
Mr. Thompson is entitled to up to an additional 5,000 shares of
Restricted Stock if Mr. Thompson purchases an equal number of such
shares. Mr. Thompson purchased 2,500 shares of Common Stock and was
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permitted to use a portion of his cash bonus for the 1996 fiscal year
to receive the remaining 2,500 shares of Common Stock to satisfy such
matching purchase. All of the Shares of Restricted Stock granted
pursuant to Mr. Thompson's Employment Agreement, as amended, are, and
will be, issued to the Trustee for the benefit of Mr. Thompson pursuant
to the Executive Deferred Compensation Plan and Executive Deferred
Compensation Rabbi Trust Agreement. Mr. Thompson, on April 1, 1996,
pursuant to the terms of his Employment Agreement, as amended, was also
granted an option to purchase 12,500 shares of Common Stock at an
exercise price of $17.625 per share, one-fifth of which vests on the
first, second, third, fourth and fifth anniversaries of the date of
grant. Mr. Thompson also received an award of 3,817 shares of Common
Stock issued to the Trustee for Mr. Thompson's benefit as a stock bonus
for 1996 granted in 1997. The table includes 728 shares which have
been, or will be, issued to the Trustee for Mr. Thompson's benefit as
part of his annual base compensation in lieu of cash compensation for
the first and second quarters of fiscal 1997. The table does not
include 727 shares which will be issued to the Trustee for Mr.
Thompson's benefit as part of his annual base compensation in lieu of
cash compensation for the third and fourth quarters of fiscal 1997.
(5) Ms. Fox, on June 1, 1997, received an award of 7,500 Shares of
Restricted Stock, one- third of which vests on each of the third,
fourth and fifth anniversaries of the date of grant pursuant to the
terms of her Employment Agreement with the Company. In addition,
pursuant to the terms of her Employment Agreement with the Company, Ms.
Fox, on June 1, 1997, received an award of 9,000 shares of Restricted
Stock, which vesting is contingent upon the Company's internal rate of
return on its investment in LEAF Asset Management, Inc. (an Ohio
corporation and wholly owned subsidiary of the Company) achieving
certain targets. Ms. Fox, on June 1, 1997, pursuant to the terms of her
Employment Agreement, was also granted an option to purchase 12,500
shares of Common Stock at an exercise price of $23.75 per share,
one-fifth of which vests on the first, second, third, fourth and fifth
anniversaries of the date of grant.
(6) Mr. Selid, on April 15, 1996, received an award of 9,000 Shares of
Restricted Stock, the vesting of which is contingent upon the Company
achieving certain market capitalization targets pursuant to the terms
of his Employment Agreement with the Company. In addition, pursuant to
the terms of his Employment Agreement with the Company, Mr. Selid is
entitled to up to an additional 2,500 shares of Restricted Stock if Mr.
Selid purchases an equal number of such shares. Mr. Selid purchased
1,250 shares of Common Stock and was permitted to use a portion of his
cash bonus for the 1996 fiscal year to receive the remaining 1,250
shares of Common Stock to satisfy such matching purchase. All of the
Shares of Restricted Stock granted pursuant to Mr. Selid's Employment
Agreement are, and will be, issued to the Trustee for the benefit of
Mr. Selid pursuant to the terms of the Executive Deferred Compensation
Plan and Executive Deferred Compensation Rabbi Trust Agreement. Mr.
Selid, on April 15, 1996, pursuant to the terms of his Employment
Agreement, as amended, was also granted an option to purchase 12,500
shares of Common Stock at an exercise price of $18.25 per share, one-
fifth of which vests on the first, second, third, fourth and fifth
anniversaries of the date of grant. Mr. Selid also received an award of
2,872 shares of Common Stock issued to the Trustee for Mr. Selid's
benefit as a stock bonus for 1996 granted in 1997.
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(7) Mr. Alexander, on January 1, 1997, received an award of 5,000 Shares of
Restricted Stock, one-third of which vests on each of the third, fourth
and fifth anniversaries of the date of grant pursuant to the terms of
his Employment Agreement with the Company. Mr. Alexander, on January 1,
1997, pursuant to the terms of his Employment Agreement, was also
granted an option to purchase 2,500 shares of Common Stock at an
exercise price of $20.63 per share, one-third of which vests on the
third, fourth and fifth anniversaries of the date of grant. Mr.
Alexander previously received, on August 1, 1996, an option to purchase
312 shares of Common Stock at an exercise price of $19.00 per share,
one-third of which vests on each of the first, second and third
anniversaries of the date of grant.
(8) As a non-employee director of the Company, Mr. Gothier was granted a
stock option to purchase that number of shares of Common Stock equal to
0.1875% of the Company's Total Committed Equity (7,500 shares of Common
Stock). The options are exercisable to the extent of 10% of shares of
Common Stock covered by the grant after Mr. Gothier has served
continuously as a director of the Company and to the extent of an
additional 10% of such shares after each of the next nine successive
six-month periods of continuous service; therefore 6,750 shares, as of
January 31, 1997, of Common Stock underlying this stock option are
attributable to Mr. Gothier, because he has the immediate vested right
to acquire such shares based on the commencement of his term as a
director on September 11, 1992. Mr. Gothier has exercised a portion of
this option and purchased 3,750 shares of Common Stock. In addition, on
November 30, 1995, Mr. Gothier was granted an option to purchase 2,000
shares of Common Stock, with an exercise price equal to $17.25, which
options are fully vested. On May 23, 1996, Mr. Gothier was granted an
option to purchase an additional 2,000 shares of Common Stock, with an
exercise price of $21.25, which options are fully vested. In addition,
the amount in the table includes (a) 300 shares of Common Stock
purchased by Mr. Gothier through his Individual Retirement Account, (b)
2,375 shares of Common Stock purchased by RVG Management and
Development Company, of which Mr. Gothier is President and a
shareholder and (c) 1,108 shares of restricted Common Stock granted to
Mr. Gothier pursuant to his participation in the Company's Non-Employee
Director Restricted Stock Plan, in which he received such shares in
lieu of director's fees.
(9) As a non-employee director of the Company, Mr. Neilan was granted a
stock option to purchase that number of shares of Common Stock equal to
0.1875% of the Company's Total Committed Equity (7,500 shares of Common
Stock). The options are exercisable to the extent of 10% of shares of
Common Stock covered by the grant after Mr. Neilan has served
continuously as a director of the Company and to the extent of an
additional 10% of such shares after each of the next nine successive
six-month periods of continuous service; therefore 6,750 shares, as of
January 31, 1997, of Common Stock underlying this stock option are
attributable to Mr. Neilan, because he has the immediate vested right
to acquire such shares based on the commencement of his term as a
director on September 11, 1992. In addition, on November 30, 1995, Mr.
Neilan was granted an option to purchase 2,000 shares of Common Stock,
with an exercise price equal to $17.25, which options are fully vested.
On May 23, 1996, Mr. Neilan was granted an option to purchase an
additional 2,000 shares of Common Stock, with an exercise price of
$21.25, which options are fully vested. In addition, the amount in the
table includes 605 shares of restricted Common Stock granted to Mr.
Neilan pursuant to his participation in the Company's Non-Employee
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Director Restricted Stock Plan, in which he received such shares in
lieu of director's fees.
(10) As a non-employee director of the Company, Mr. Oberer was granted a
stock option to purchase that number of shares of Common Stock equal to
0.1875% of the Company's Total Committed Equity (7,500 shares of Common
Stock). The options are exercisable to the extent of 10% of shares of
Common Stock covered by the grant after Mr. Oberer has served
continuously as a director of the Company and to the extent of an
additional 10% of such shares after each of the next nine successive
six-month periods of continuous service; therefore 6,750 shares, as of
January 31, 1997, of Common Stock underlying this stock option are
attributable to Mr. Oberer, because he has the immediate vested right
to acquire such shares based on the commencement of his term as a
director on September 11, 1992. In addition, on November 30, 1995, Mr.
Oberer was granted an option to purchase 2,000 shares of Common Stock,
with an exercise price equal to $17.25, which options are fully vested.
On May 23, 1996, Mr. Oberer was granted an option to purchase an
additional 2,000 shares of Common Stock, with an exercise price of
$21.25, which options are fully vested. In addition, the amount in the
table includes (a) 5,788 shares of Common Stock received by Oberer
Development Company, of which Mr. Oberer is President and a
shareholder, for an unsecured claim under the Company's Plan of
Reorganization, (b) 14,000 shares of Common Stock held by Mr. Oberer,
individually, and (c) 1,525 shares of restricted Common Stock granted
to Mr. Oberer pursuant to his participation in the Company's
Non-Employee Director Restricted Stock Plan, in which he received such
shares in lieu of director's fees.
(11) As a non-employee director of the Company, Mr. Pollack was granted a
stock option to purchase that number of shares of Common Stock equal to
0.1875% of the Company's Total Committed Equity (7,500 shares of Common
Stock). The options are exercisable to the extent of 10% of shares of
Common Stock covered by the grant after Mr. Pollack has served
continuously as a director of the Company and to the extent of an
additional 10% of such shares after each of the next nine successive
six-month periods of continuous service; therefore 6,750 shares, as of
January 31, 1997, of Common Stock underlying this stock option are
attributable to Mr. Pollack, because he has the immediate vested right
to acquire such shares based on the commencement of his term as a
director on September 11, 1992. In addition, on November 30, 1995, Mr.
Pollack was granted an option to purchase 2,000 shares of Common Stock,
with an exercise price equal to $17.25, which options are fully vested.
On May 23, 1996, Mr. Pollack was granted an option to purchase an
additional 2,000 shares of Common Stock, with an exercise price of
$21.25, which options are fully vested. In addition, the amount in the
table includes (a) 2,500 shares of Common Stock held by Mr. Pollack,
individually, and (b) 1,536 shares of restricted Common Stock granted
to Mr. Pollack pursuant to his participation in the Company's
Non-Employee Director Restricted Stock Plan, in which he received such
shares in lieu of director's fees.
(12) As a non-employee director of the Company, Mr. Schwartz was granted a
stock option to purchase that number of shares of Common Stock equal to
0.1875% of the Company's Total Committed Equity (7,500 shares of Common
Stock). The options are exercisable to the extent of 10% of shares of
Common Stock covered by the grant after Mr. Schwartz has served
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continuously as a director of the Company and to the extent of an
additional 10% of such shares after each of the next nine successive
six-month periods of continuous service; therefore 6,750 shares, as of
January 31, 1997, of Common Stock underlying this stock option are
attributable to Mr. Schwartz, because he has the immediate vested right
to acquire such shares based on the commencement of his term as a
director on September 11, 1992. In addition, on November 30, 1995, Mr.
Schwartz was granted an option to purchase 2,000 shares of Common
Stock, with an exercise price equal to $17.25, which options are fully
vested. On May 23, 1996, Mr. Schwartz was granted an option to purchase
an additional 2,000 shares of Common Stock, with an exercise price of
$21.25, which options are fully vested. In addition, the amount in the
table includes (a) 10,000 shares of Common Stock held by Mr. Schwartz,
individually, and (b) 1,725 shares of restricted Common Stock granted
to Mr. Schwartz pursuant to his participation in the Company's
Non-Employee Director Restricted Stock Plan, in which he received such
shares in lieu of director's fees.
(13) As a non-employee director of the Company, Mr. Wedren was granted a
stock option to purchase that number of shares of Common Stock equal to
0.1875% of the Company's Total Committed Equity (7,500 shares of Common
Stock). The options are exercisable to the extent of 10% of shares of
Common Stock covered by the grant after Mr. Wedren has served
continuously as a director of the Company and to the extent of an
additional 10% of such shares after each of the next nine successive
six-month periods of continuous service; therefore 6,750 shares, as of
January 31, 1997, of Common Stock underlying this stock option are
attributable to Mr. Wedren, because he has the immediate vested right
to acquire such shares based on the commencement of his term as a
director on September 11, 1992. In addition, on November 30, 1995, Mr.
Wedren was granted an option to purchase 2,000 shares of Common Stock,
with an exercise price equal to $17.25, which options are fully vested.
On May 23, 1996, Mr. Wedren was granted an option to purchase an
additional 2,000 shares of Common Stock, with an exercise price of
$21.25, which options are fully vested. In addition, the amount in the
table includes 806 shares of restricted Common Stock granted to Mr.
Wedren pursuant to his participation in the Company's Non-Employee
Director Restricted Stock Plan, in which he received such shares in
lieu of director's fees.
(14) As a non-employee director of the Company, Mr. Weiler was granted a
stock option to purchase that number of shares of Common Stock equal to
0.1875% of the Company's Total Committed Equity (7,500 shares of Common
Stock). The options are exercisable to the extent of 10% of shares of
Common Stock covered by the grant after Mr. Weiler has served
continuously as a director of the Company and to the extent of an
additional 10% of such shares after each of the next nine successive
six-month periods of continuous service; therefore 6,750 shares, as of
January 31, 1997, of Common Stock underlying this stock option are
attributable to Mr. Weiler, because he has the immediate vested right
to acquire such shares based on the commencement of his term as a
director on September 11, 1992. In addition, on November 30, 1995, Mr.
Weiler was granted an option to purchase 2,000 shares of Common Stock,
with an exercise price equal to $17.25, which options are fully vested.
On May 23, 1996, Mr. Weiler was granted an option to purchase an
additional 2,000 shares of Common Stock, with an exercise price of
$21.25, which options are fully vested. In addition, the amount in the
table includes (a) 36,000 shares of Common Stock held by Mr. Weiler's
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wife and (b) 1,187 shares of restricted Common Stock granted to Mr.
Weiler pursuant to his participation in the Company's Non-Employee
Director Restricted Stock Plan, in which he received such shares in
lieu of director's fees.
(15) Mr. Trubiana received an award of Restricted Stock equal to 0.60% of
the Company's Total Committed Equity under the Incentive Equity Plan,
(24,061 Shares of Restricted Stock). Mr. Trubiana received an award of
Deferred Stock equal to 0.19% of the Company's Total Committed Equity
under the Incentive Equity Plan (7,619 Shares), contingent upon (i) the
average price per share of the Common Stock during the six-month period
from March 11, 1995 to September 11, 1995 being at least $3.93 and (ii)
Mr. Trubiana being in the employ of the Company on September 11, 1995.
The Compensation Committee of the Board of Directors accelerated the
vesting of the Deferred Stock and such Shares were issued to Mr.
Trubiana on January 18, 1995. Mr. Trubiana has been attributed with
2,416 shares of Common Stock pursuant to his participation in the
Company's 401(k) Savings Plan in which the Company matches a portion of
an employee's contribution. Pursuant to the Trustee's Second Employee
Retention Plan, Mr. Trubiana was granted currently exercisable stock
options to purchase 4,378 shares of Common Stock at an exercise price
of $1.42 per share. Mr. Trubiana also received 936 shares of Common
Stock for an unsecured Claim under the Plan of Reorganization. Mr.
Trubiana has purchased 2,330 shares directly. Mr. Trubiana purchased
550 shares for his own Individual Retirement Account and his wife
purchased 540 shares for her Individual Retirement Account.
(16) Mr. Koegler received 5,510 shares of Restricted Stock under the
Incentive Equity Plan, 4,500 shares of which have vested. Mr. Koegler
sold 430 of such shares. Mr. Koegler received a currently exercisable
option to purchase 1,355 shares of Common Stock pursuant to the
Trustee's Second Employee Retention Plan which was approved by the
Bankruptcy Court during the Company's bankruptcy proceedings. Mr.
Koegler's account is allocated with approximately 343 shares of Common
Stock pursuant to his participation in the Company's 401(k) Plan. The
table includes 242 shares which have been, or will be, issued to the
Trustee for Mr. Koegler's benefit as part of his annual base
compensation in lieu of cash compensation for the first and second
quarters of fiscal 1997. This table does not include 243 shares which
will be issued to the Trustee for Mr. Koegler's benefit as part of his
annual base compensation in lieu of cash compensation for the third and
fourth quarters of fiscal 1997.
(17) Ms. Souder received an award of 4,000 Shares of Restricted Stock under
the Incentive Equity Plan. Ms. Souder also received 2 shares of Common
Stock for an unsecured claim under the Plan of Reorganization. On June
27, 1996, Ms. Souder was also granted an option to purchase 2,500
shares of Common Stock at an exercise price of $19.25 per share with
vesting over a three year period from the date of grant. The table
includes 370 shares which have been, or will be, issued to the Trustee
for Ms. Souder's benefit as part of her annual base compensation in
lieu of cash compensation for the first and second quarters of fiscal
1997. This table does not include 370 shares which will be issued to
the Trustee for Ms. Souder's benefit as part of her annual base
compensation in lieu of cash compensation for the third and fourth
quarters of fiscal 1997.
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compensation for the first and second quarters of fiscal 1997. This
table does not include 370 shares which will be issued to the Trustee
for Ms. Souder's benefit as part of her annual base compensation in
lieu of cash compensation for the third and fourth quarters of fiscal
1997.
(18) Mr. Clark received 6,010 shares of Common Stock under the Incentive
Equity Plan, 5,334 shares of which have vested. Mr. Clark also received
a currently exercisable option to purchase 1,355 shares of Common
Stock. Mr. Clark's account is attributed with approximately 358 shares
of Common Stock pursuant to his participation in the Company's 401(k)
Plan.
(19) Mr. Russell received 6,010 shares of Common Stock under the Incentive
Equity Plan, 5,334 shares of which have vested. Mr. Russell sold 2,665
of such shares. Mr. Russell also received a currently exercisable
option to purchase 1,355 shares of Common Stock. Mr. Russell's account
is attributed with approximately 2,647 shares of Common Stock pursuant
to his participation in the Company's 401(k) Plan. Mr. Russell also
holds 2,321 shares of Common Stock for his own account.
(20) Mr. Lavery received 6,510 shares of Common Stock under the Incentive
Equity Plan, 6,010 shares of which have vested. Mr. Lavery sold 5,505
of such shares. Mr. Lavery's account is attributed with approximately
458 shares of Common Stock pursuant to his participation in the
Company's 401(k) Plan.
(21) Mr. Akin received 1,500 shares of Common Stock under the Incentive
Equity Plan, 1,000 shares of which have vested. Mr. Akin also received
a currently exercisable stock option to purchase 1,203 shares of Common
Stock. Mr. Akin's account is attributed with 664 shares of Common Stock
pursuant to his participation in the Company's 401(k) Plan. Mr. Akin
holds 1,086 shares for his own account.
(22) Ms. Potts received 1,000 shares of Common Stock under the Incentive
Equity Plan, 666 shares of which have vested. Ms. Potts also received a
currently exercisable stock option to purchase 802 shares of Common
Stock. On June 27, 1996, Ms. Potts received an option to purchase 5,000
shares of Common Stock at an exercise price of $19.25 per share,
one-third of which vests on the first, second and third anniversaries
of the date of grant. Ms. Potts has been attributed with approximately
221 shares of Common Stock pursuant to her participation in the
Company's 401(k) Plan.
(23) Mr. Litzelfelner received 1,000 shares of Common Stock under the
Incentive Equity Plan, 666 of which have vested and been sold by Mr.
Litzelfelner. Mr. Litzelfelner has been attributed with 364 shares of
Common Stock pursuant to his participation in the Company's 401(k)
Plan.
(24) Ms. Martin received 500 shares of Common Stock under the Incentive
Equity Plan, 334 of which have vested.
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(25) Mr. Schaefer received 500 shares of Common Stock under the Incentive
Equity Plan, 334 of which have vested and been sold by Mr. Schaefer.
Mr. Schaefer has been attributed with 231 shares of Common Stock
pursuant to his participation in the Company's 401(k) Plan.
(26) Ms. Davis received 500 shares of Common Stock under the Incentive
Equity Plan, 334 of which have vested. Ms. Davis has been attributed
with 239 shares of Common Stock pursuant to her participation in the
Company's 401(k) Plan. Ms. Davis also received a currently exercisable
option to purchase 802 shares of Common Stock.
PLAN OF DISTRIBUTION
The Shares offered hereby are being sold by the Selling Shareholders,
each acting as principal for his or her own account. The Company will receive no
proceeds from the sale of the Shares in this offering. The Shares may be sold
from time to time to purchasers directly by the Selling Shareholders.
Alternatively, the Selling Shareholders may sell the Shares in one or more
transactions (which may involve one or more block transactions) in the
over-the-counter market, in privately negotiated transactions, in a combination
of such transactions or otherwise; each sale may be made either at market prices
prevailing at the time of such sale or at negotiated prices; some or all of the
Shares may be sold through brokers acting on behalf of the Selling Shareholders
or to dealers for resale by such dealers; and in connection with such sales,
such brokers or dealers may receive compensation in the form of discounts, fees
or commissions from the Selling Shareholder and/or the purchasers of such Shares
for whom they may act as broker or agent (which compensation may be in excess of
customary commissions). It is anticipated that the Selling Shareholders may
eventually offer all of the Shares for sale. All expenses of registration
incurred in connection with this offering are being borne by the Company, but
all brokerage commissions and other similar expenses incurred by the Selling
Shareholders will be borne by the Selling Shareholders.
Each Selling Shareholder and any dealer acting in connection with the
offering of any of the Shares or any broker executing selling orders on behalf
of any of the Selling Shareholders may be deemed to be "underwriters" within the
meaning of the 1933 Act in which event any profit on the sale of any or all of
the Shares and any discounts or concessions received by any such brokers or
dealers may be deemed to be underwriting discounts and commission under the 1933
Act. Any dealer or broker participating in any distribution of the Shares may be
required to deliver a copy of this Prospectus, including a Prospectus
supplement, to any person who purchases any of the Shares from or through such
broker or dealer.
At the time a particular offer of Shares is made, to the extent
required, a supplement to this Prospectus will be distributed which will
identify and set forth the aggregate amount of Shares being offered and the
terms of the offering, including the name or names of any underwriters, dealers
or agents, the purchase price paid by any underwriter for Shares purchased from
the Selling Shareholders, any discounts, commissions and other items
constituting compensation from the Selling Shareholders and/or the Company and
any discounts, commissions or concessions allowed or reallowed or paid to
dealers, including the proposed selling price to the public.
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The Selling Shareholders are not restricted as to the price or prices
at which they may sell their Shares. Sales of Shares at less than market prices
may depress the market price of the Company's Common Stock. Moreover, the
Selling Shareholders are not restricted as to the number of Shares which may be
sold at any one time, and it is possible that a significant number of Shares
could be sold at the same time.
Under applicable rules and regulations under the 1934 Act, any person
engaged in a distribution of the Shares may not simultaneously engage in market
making activities with respect to the Shares for a period of nine business days
prior to the commencement of such distribution. In addition and without limiting
the foregoing, the Selling Shareholders will be subject to applicable provisions
of the 1934 Act and the rules and regulations thereunder, including without
limitation Rules 10b-2, 10b-6 and 10b-7, which provisions may limit the timing
of purchases and sales of the Shares by the Selling Shareholders.
In order to comply with certain states' securities laws, if applicable,
the Shares will be sold in such jurisdictions only through registered or
licensed brokers or dealers. In certain states the Shares may not be sold unless
the Shares have been registered or qualified for sale in such state, or unless
an exemption from registration or qualification is available and is obtained.
LEGAL MATTERS
The validity of the Shares of Common Stock offered hereby has been
passed upon for the Company by the law firm of Benesch, Friedlander, Coplan &
Aronoff LLP, Cleveland, Ohio. H. Jeffrey Schwartz, a partner in the firm of
Benesch, Friedlander, Coplan & Aronoff LLP, is a shareholder and a director of
the Company.
EXPERTS
The consolidated financial statements of Cardinal Realty Services, Inc.
appearing in Cardinal Realty Services, Inc.'s Annual Report (Form 10-K) for the
year ended December 31, 1996, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such financial statements are, and audited
financial statements to be included in subsequently filed documents will be,
incorporated herein in reliance upon the reports of Ernst & Young LLP pertaining
to such financial statements (to the extent covered by consents filed with the
Securities and Exchange Commission) given upon the authority of such firm as
experts in accounting and auditing.
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PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The documents listed below are incorporated by reference in this
Registration Statement; and all documents concurrently and subsequently filed by
Cardinal Realty Services, Inc. (the "Company") pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Securities Exchange Act of 1934, prior to the filing
of a post-effective amendment which indicates all securities offered have been
sold or which de-registers all securities then remaining unsold, shall be deemed
to be incorporated by reference in this Registration Statement and to be a part
hereof from the date of filing of such document.
(1) The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996 filed with the Commission on March 31,
1997 (File No. 0-21670) as amended on Form 10-K/A filed with
the Commission on April 14, 1997.
(2) The Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 1997 filed with the Commission on May
13, 1997 (File No. 0-21670).
(3) The description of the Common Stock contained in the Company's
Registration Statement on Form 10, filed with the Commission
on April 30, 1993, as amended on Form 10/A filed with the
Commission on June 25, 1993, Form 10/A (Amendment No. 2) filed
with the Commission on July 26, 1993, and Form 10/A (Amendment
No. 3) filed with the Commission on August 10, 1993.
For purposes of this Registration Statement, any statement contained in
a document incorporated by or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute part of this Registration Statement.
Item 4. Description of Securities.
Not Applicable
Item 5. Interests of Named Experts and Counsel.
The legality of the Common Stock being registered pursuant to this
Registration Statement has been passed upon by Benesch, Friedlander, Coplan &
Aronoff LLP, outside legal counsel to the Company. H. Jeffrey Schwartz, a
partner in the law firm of Benesch, Friedlander, Coplan & Aronoff LLP, is a
shareholder and director of the Company.
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Item 6. Indemnification of Directors and Officers.
Regulations of the Company
The Company's Regulations provide for the indemnification, to the
fullest extent permitted by law, of any person who was, or is, or is threatened
to be made, a party to a suit or other proceeding by reason of the fact that he
is or was a director, officer, employee or agent of the Company, or is, or was,
serving at the request of the Company as a director, trustee, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise. The Regulations further provide that the Company will pay expenses,
as incurred by a director, trustee, officer, employee or agent, in the defense
of any such suit or other proceeding, and may pay such expenses, in the same
manner, as incurred by any other person. However, the indemnification and
payment of expenses is expressly prohibited as to any person who, on or before
May 15, 1989 was, but who on the date of the adoption of the Regulations was no
longer, a director, officer, employee or agent of the Company or serving at the
request of the Company as a director, trustee, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise.
The Company is further authorized, upon approval of the Board, to enter
into agreements with any persons to indemnify and pay expenses of such persons
incurred in defending any action against them. The indemnification and payment
of expense provisions of the Regulations are not exclusive of any other
indemnification rights existing under law or otherwise.
Ohio Statutory Indemnification
Under Ohio law, directors, officers, and employees may be indemnified
against expenses, including attorney's fees, judgments, fines, and amounts paid
in settlement, actually and reasonably incurred in the defense of any pending or
threatened action, suit or proceeding, other than a derivative action, if such
director, officer or agent acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of the corporation, and
with respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. The determination that such director, officer
or employee has met the applicable standard of conduct shall be made: (a) by a
majority vote of a quorum of directors not parties to the action, suit or
proceeding; (b) if such a quorum is not obtainable or if a quorum directs, by
independent legal counsel; (c) by the shareholders of the Company; or (d) by a
court of common pleas or other court in which the action, suit or proceeding was
brought.
Indemnification, as described above, is also permitted in a derivative
action except that the indemnification only includes expenses that are
attorney's fees and omits judgments, fines and amounts paid in settlement.
Indemnification in a derivative action is further limited in that no
indemnification generally will be made with respect to any claim as to which a
person is adjudged to be liable for negligence or misconduct in performance of
his duty to the corporation or any claim where the only liability asserted
against a director relates to an unlawful loan, dividend, or distribution of
assets under Ohio Revised Code ("ORC") ss. 1701.95.
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Pursuant to ORC ss. 1701.13(E)(5)(a), expenses incurred by a director
in defending an action, suit or proceeding will be paid by a corporation as they
are incurred in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by the director to: (a) repay such
amount if it is proved by clear and convincing evidence that his action or
failure to act involved an act or omission undertaken with deliberate intent to
cause injury to the corporation or undertaken with reckless disregard for the
best interests of the corporation, and (b) reasonably cooperate with the
corporation concerning the action, suit or proceeding. This duty to pay expenses
of a director does not apply if the articles or regulations of the corporation
specifically state that subsection (E)(5) is inapplicable to the corporation and
the only liability asserted against a director in an action, suit or proceeding
relates to an unlawful loan, dividend or distribution of assets under ORC ss.
1701.95.
Pursuant to ORC ss. 1701.13(E)(5)(b), expenses incurred by a director,
trustee, officer, employee or agent in defending an action, suit or proceeding
may be paid by the corporation in advance of the final disposition of such
action, suit or proceeding as authorized by the directors in a specific case
upon the receipt of an undertaking by the director, trustee, officer, employee
or agent to repay such amount if it is ultimately determined that he is not
entitled to be indemnified by the corporation.
Indemnification authorized under Ohio statutory law is in addition to
any other rights granted to those seeking indemnification by the articles or
regulations, any agreement, any vote of the shareholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office. Indemnification under Ohio
statutory law continues as to a person who has ceased to be a director, trustee,
officer, employee or agent, and inures to the benefit of the heirs, executors
and administrators of such person.
Indemnification Agreements
The Company has entered into Indemnification Agreements with certain of
its directors and officers. Under the terms of the Indemnification Agreements,
the Company will indemnify a director or an officer, if or when he is a party or
is threatened to be made a party to any action, suit or proceeding, other than a
derivative action, by reason of the fact that he is or was a director or officer
of the Company, against any and all costs, charges, expenses, judgments, fines
and amounts paid in settlement, actually and reasonably incurred, unless it is
proved by clear and convincing evidence that such director or officer acted or
failed to act with deliberate intent to cause injury to the Company or with
reckless disregard for the best interests of the Company.
The director or officer will also be indemnified if a derivative action
is brought against him, unless it is proved by clear and convincing evidence
that such director or officer acted or failed to act with deliberate intent to
cause injury to the Company; provided, however, that no indemnification will be
made with respect to any suit in which the only liability asserted against the
officer or director relates to an unlawful loan, dividend or distribution of
assets under ORC ss. 1701.95.
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The determination of whether an officer or director has met the
standard of conduct applicable to a nonderivative action or a derivative action
under the Indemnification Agreements will be made by: (a) a majority vote of a
quorum of directors not parties to the action, suit or proceeding; (b)
independent legal counsel, if such a quorum is not obtainable or if a quorum
directs; (c) the shareholders of the Company; or (d) by a court of common pleas
or other court in which the action, suit or proceeding was brought.
To the extent that a director or officer is successful on the merits or
otherwise, he shall be indemnified against expenses actually and reasonably
incurred by him. Expenses actually and reasonably incurred by the director or
officer in defending any such action, suit or proceeding will be paid by the
Company as they are incurred in advance of the final disposition of such action,
suit or proceeding upon the receipt by the Company of the undertaking described
below.
The Indemnification Agreements provide for additional indemnification
against any amount which the officer or director is or becomes obligated to pay
relating to or arising out of any claim made against him because of a breach of
duty which he commits while acting in his capacity as a director or an officer
of the Company. However, the Company is not obligated to make such payment to
the extent that the Company is prohibited by law from making such payment or to
the extent that the officer or director has realized a personal gain or profit
to which he is not entitled under applicable law.
Expenses by a director or officer in defending any action, suit or
proceeding, will be paid as they are actually and reasonably incurred, in
advance of the final disposition of such claim, if the officer or director is
eligible to make and does make an undertaking to: (a) repay such amount if it is
proved by clear and convincing evidence that his action or failure to act
involved an act or omission undertaken with deliberate intent to cause injury to
the Company or undertaken with reckless disregard for the best interests of the
Company, and (b) reasonably cooperate with the Company concerning the action,
suit or proceeding. In any event, the officer or director may receive payment of
his expenses in advance of the final disposition of such action, suit or
proceeding, by undertaking to repay such amount if it is ultimately determined
that he is not entitled to be indemnified by the Company.
The rights to indemnification set forth in the Indemnification
Agreements permit other indemnification rights existing under the Articles of
Incorporation, the Regulations or the ORC or any other statute, any insurance
policy, any agreement or vote of shareholders or directors or otherwise, as to
any actions or failures to act by the officer or director. Indemnification under
the Indemnification Agreements continues as to a director or officer who has
ceased to be a director or officer of the Company, and inures to the benefit of
the heirs, executors and administrators of such officer or director.
Directors and Officers Insurance
The Company has directors and officers insurance coverage up to an
annual aggregate of $10 million to reimburse (a) individual officers and
directors if indemnification from the Company is not
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23
available and (b) the Company with respect to its responsibility to indemnify
its directors and officers. The policy has the following deductible:
o With respect to claims by the Company, $100,000 per
claim.
Exclusions under the policy include, but are not limited to, claims
involving: (a) dishonest, fraudulent or criminal acts or omissions; (b)
allegations of personal profit; (c) remuneration of officers or directors
without shareholder approval when otherwise required; (d) wrongful acts
committed subsequent to a corporate takeover; (e) greenmail; (f) wrongful acts
committed (i) prior to policy inception and (ii) subsequent to policy inception
which, when taken together with a wrongful act committed prior to such date,
would constitute interrelated wrongful acts; and (g) punitive or exemplary
damages, criminal or civil fines or penalties imposed by law.
Item 7. Exemption from Registration Claimed.
Pursuant to the Incentive Equity Plan of the Company, the Director
Plan, the Employment Agreements and the Award Agreements with certain specified
executive officers and directors, the Company awarded or issued in lieu of cash
compensation an aggregate of 140,218 shares of Restricted Common Stock to or for
the benefit of certain of its executive officers and directors. The restricted
shares were originally issued pursuant to an exemption from registration under
Section 4(2) of the Securities Act of 1933. At the time of issuance, each
officer and director represented to the Company that he or she was acquiring the
Common Stock for his or her own account for investment purposes and that he or
she had the capacity to evaluate the merits and risks of the investment and to
protect his or her own interests in connection with the transaction. The
certificates representing the shares of Common Stock bear a restrictive legend
stating that the shares are not registered under the Securities Act of 1933 and
may not be transferred absent the Company's filing a registration statement or
acknowledgment that a valid exemption from registration exists.
Item 8. Exhibits.
4.1 Restated Articles of Incorporation of the Company filed May
10, 1996 with the Ohio Secretary of State.
4.2 Regulations, as amended, of the Company (incorporated by
reference to Exhibit 3.3 to the Form 10 Registration
Statement).
4.3 Amended and Restated 1992 Incentive Equity Plan of Cardinal
Realty Services, Inc.
4.4 Cardinal Realty Services, Inc. Non-Employee Director
Restricted Stock Plan.
4.5 Executive Deferred Compensation Plan.
4.6 Executive Deferred Rabbi Trust Agreement dated November 27,
1996 between the Company and the Provident Bank.
II-5
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24
4.7 Employment Agreement dated December 1, 1995, between the
Company and John B. Bartling, Jr. (incorporated by reference
to Exhibit 10.38 of the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1995).
4.8 Amendment to Employment and Award Agreements, dated as of
April 18, 1996, between the Company and John B. Bartling, Jr.
4.9 Second Amendment to the Employment Agreement, dated as of
December 20, 1996, between the Company and John B. Bartling,
Jr.
4.10 Third Amendment to the Employment Agreement, dated as of
January 1, 1997, between the Company and John B. Bartling, Jr.
4.11 Employment Agreement, dated as of April 1, 1996, between the
Company and Mark D. Thompson.
4.12 Amendment to Employment and Award Agreements, dated as of
April 18, 1996, between the Company and Mark D. Thompson.
4.13 Second Amendment to the Employment Agreement, dated as of
December 20, 1996, between the Company and Mark D. Thompson.
4.14 Third Amendment to the Employment Agreement, dated as of
January 1, 1997, between the Company and Mark D. Thompson.
4.15 Employment Agreement, dated April 15, 1996, between the
Company and Paul R. Selid.
4.16 Amended and Restated Award Agreement of John B. Bartling, Jr.,
dated as of April 18, 1996, relating to the Restricted Shares
Award (Stock Award).
4.17 Amended and Restated Award Agreement of John B. Bartling,
Jr., dated as of April 18, 1996, relating to the Restricted
Shares Award (Market Cap).
4.18 Amended and Restated Award Agreement of Mark D. Thompson,
dated as of April 18, 1996, relating to the Restricted Shares
Award (Stock Award).
4.19 Amended and Restated Award Agreement of Mark D. Thompson,
dated as of April 18, 1996, relating to the Restricted Shares
Award (Market Cap).
4.20 Amended and Restated Award Agreement of Mark D. Thompson,
dated as of April 18, 1996, relating to the Deferred Shares
Award (Stock Bonus-Incentive Compensation).
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25
4.21 Award Agreement of Paul R. Selid, dated as of April 18, 1996,
relating to the Restricted Shares Award (Market Cap).
4.22 Award Agreement of Paul R. Selid, dated as of April 18, 1996,
relating to the Deferred Shares Award (Stock Bonus-Incentive
Compensation).
4.23 Employment Agreement, dated August 1, 1996, between the
Company and Patrick M. Holder.
4.24 Supplemental Letter to Employment Agreement of Patrick M.
Holder, dated August 1, 1996, between the Company and Patrick
M. Holder.
4.25 Restricted Stock Award Agreement, dated December 1, 1995,
between the Company and Joseph E. Madigan.
4.26 Restricted Stock Award Agreement, dated December 1, 1996,
between the Company and Joseph E. Madigan.
4.27 Employment Agreement, dated as of June 1, 1997, among the
Company, LEAF Asset Management, Inc. and Leslie Fox.
4.28 Award Agreement between the Company and Leslie Fox dated as
of June 1, 1997 relating to the Restricted Stock Awards (Stock
Award).
4.29 Award Agreement between the Company and Leslie Fox dated as
of June 1, 1997 relating to the Restricted Stock Awards
(Investment Return).
4.30 Employment Agreement, dated as of January 1, 1997, among the
Company, Lexford Properties, Inc. and James D. Alexander.
4.31 Award Agreement between the Company and James D. Alexander
dated as of January 1, 1997 (Stock Award).
4.32 Award Agreement between the Company and James D. Alexander
dated as of January 1, 1997 (Stock Bonus).
4.33 Award Agreement between the Company and Michele R. Souder
dated as of January 1, 1997.
4.34 Award Agreement between the Company and Ronald P. Koegler
dated as of January 1, 1997.
5.1 Opinion of Benesch, Friedlander, Coplan & Aronoff LLP, outside
counsel to the Company, regarding legality.
23.1 Consent of Ernst & Young LLP, independent public accountants.
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<PAGE>
26
23.2 Consent of Benesch, Friedlander, Coplan & Aronoff LLP
(contained in its opinion filed as Exhibit 5.1 to this
Registration Statement).
24.1 Powers of Attorney (included in Part II of this Registration
Statement).
* Incorporated herein by reference as indicated.
Item 9. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this
Registration Statement;
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts
or events arising after the effective date of the
Registration Statement (or the most recent
post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change
in the information set forth in the Registration
Statement;
(iii) To include any material information
with respect to the plan of distribution not
previously disclosed in the Registration Statement or
any material change to such information in the
Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the Registration Statement is on Form S-3, Form
S-8 or Form F-3, and the information required to be included
in a post-effective amendment by those paragraphs is contained
in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the Registration
Statement.
(2) That, for the purpose of determining any
liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of the
offering.
II-8
<PAGE>
27
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933,
each filing of the registrant's annual report pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the Registration Statement shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
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<PAGE>
28
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Columbus, State of Ohio, on this 3rd day of
July, 1997.
CARDINAL REALTY SERVICES, INC.
(Registrant)
By: /s/ John B. Bartling, Jr.
--------------------------------
John B. Bartling, Jr.
President, Chief Executive
Officer and
Director
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<PAGE>
29
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints John B. Bartling, Jr. and Mark D.
Thompson, or either of them, his true and lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any and all amendments to
this Registration Statement, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact, agent, or their substitutes may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons on behalf
of the Company in the capacities and on the dates indicated.
Dated: June 17, 1997 /s/ Joseph E. Madigan
-------------------------------
Joseph E. Madigan
Chairman of the Board
Dated: July 3, 1997 /s/ John B. Bartling, Jr.
-------------------------------
John B. Bartling, Jr.
President, Chief Executive
Officer and Director
(principal executive
officer)
Dated: July 3, 1997 /s/ Mark D. Thompson
-------------------------------
Mark D. Thompson
Executive Vice President and
Chief Financial
Officer (principal financial
officer)
Dated: July 3, 1997 /s/ Ronald P. Koegler
-------------------------------
Ronald P. Koegler
Vice President and Controller
(chief accounting officer)
Dated: June 17, 1997 /s/ Robert V. Gothier, Sr.
-------------------------------
Robert V. Gothier, Sr.
Director
Dated: June 17, 1997 /s/ George J. Neilan
-------------------------------
George J. Neilan
Director
<PAGE>
30
Dated: June 17, 1997 /s/ George R. Oberer, Sr.
-------------------------------
George R. Oberer, Sr.
Director
Dated: June 18, 1997 /s/ Glenn C. Pollack
-------------------------------
Glenn C. Pollack
Director
Dated: June 20, 1997 /s/ H. Jeffrey Schwartz
-------------------------------
H. Jeffrey Schwartz
Director
Dated: June 18, 1997 /s/ Gerald E. Wedren
-------------------------------
Gerald E. Wedren
Director
Dated: June 17, 1997 /s/ Robert J. Weiler
-------------------------------
Robert J. Weiler
Director
<PAGE>
31
EXHIBIT INDEX
EXHIBIT NO. EXHIBIT DESCRIPTION PAGE NO.
4.1 Restated Articles of Incorporation of the Company filed
May 10, 1996 with the Ohio Secretary of State. 34
4.2 Regulations, as amended, of the Company (incorporated by
reference to Exhibit 3.3 to the Form 10 Registration
Statement). *
4.3 Amended and Restated 1992 Incentive Equity Plan of
Cardinal Realty Services, Inc. 56
4.4 Cardinal Realty Services, Inc. Non-Employee Director
Restricted Stock Plan. 68
4.5 Executive Deferred Compensation Plan. 73
4.6 Executive Deferred Rabbi Trust Agreement dated
November 27, 1996 between the Company and the Provident Bank. 82
4.7 Employment Agreement dated December 1, 1995, between the
Company and John B. Bartling, Jr. (incorporated by
reference to Exhibit 10.38 of the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1995). *
4.8 Amendment to Employment and Award Agreements, dated
as of April 18, 1996, between the Company and John B.
Bartling, Jr. 89
4.9 Second Amendment to the Employment Agreement, dated as
of December 20, 1996, between the Company and John B.
Bartling, Jr. 93
4.10 Third Amendment to the Employment Agreement, dated as
of January 1, 1997, between the Company and John B.
Bartling, Jr. 96
4.11 Employment Agreement, dated as of April 1, 1996, between
the Company and Mark D. Thompson. 99
4.12 Amendment to Employment and Award Agreements, dated as
of April 18, 1996, between the Company and Mark D. Thompson. 117
4.13 Second Amendment to the Employment Agreement, dated as of
December 20, 1996, between the Company and Mark D. Thompson. 121
4.14 Third Amendment to the Employment Agreement, dated as
of January 1, 1997, between the Company and Mark D. Thompson. 124
<PAGE>
32
4.15 Employment Agreement, dated April 15, 1996, between the
Company and Paul R. Selid. 127
4.16 Amended and Restated Award Agreement of John B. Bartling,
Jr., dated as of April 18, 1996, relating to the
Restricted Shares Award (Stock Award). 143
4.17 Amended and Restated Award Agreement of John B. Bartling,
Jr., dated as of April 18, 1996, relating to the Restricted
Shares Award (Market Cap). 148
4.18 Amended and Restated Award Agreement of Mark D. Thompson,
dated as of April 18, 1996, relating to the Restricted Shares
Award (Stock Award). 154
4.19 Amended and Restated Award Agreement of Mark D. Thompson,
dated as of April 18, 1996, relating to the Restricted Shares
Award (Market Cap). 159
4.20 Amended and Restated Award Agreement of Mark D. Thompson,
dated as of April 18, 1996, relating to the Deferred
Shares Award (Stock Bonus-Incentive Compensation). 165
4.21 Award Agreement of Paul R. Selid, dated as of April 18,
1996, relating to the Restricted Shares Award (Market Cap). 171
4.22 Award Agreement of Paul R. Selid, dated as of April 18,
1996, relating to the Deferred Shares Award (Stock
Bonus-Incentive Compensation). 177
4.23 Employment Agreement, dated August 1, 1996, between
the Company and Patrick M. Holder. 183
4.24 Supplemental Letter to Employment Agreement of Patrick M.
Holder, dated August 1, 1996, between the Company and
Patrick M. Holder. 190
4.25 Restricted Stock Award Agreement, dated December 1, 1995,
between the Company and Joseph E. Madigan. 192
4.26 Restricted Stock Award Agreement, dated December 1, 1996,
between the Company and Joseph E. Madigan. 196
4.27 Employment Agreement, dated as of June 1, 1997, among the
Company, LEAF Asset Management, Inc. and Leslie Fox. 200
<PAGE>
33
4.28 Award Agreement between the Company and Leslie Fox dated as
of June 1, 1997 relating to the Restricted Stock Awards
(Stock Award). 221
4.29 Award Agreement between the Company and Leslie Fox dated as
of June 1, 1997 relating to the Restricted Stock Awards
(Investment Return). 226
4.30 Employment Agreement, dated as of January 1, 1997, among
the Company, Lexford Properties, Inc. and James D. Alexander. 231
4.31 Award Agreement between the Company and James D. Alexander
dated as of January 1, 1997 (Stock Award). 243
4.32 Award Agreement between the Company and James D. Alexander
dated as of January 1, 1997 (Stock Bonus). 247
4.33 Award Agreement between the Company and Michele R. Souder
dated as of January 1, 1997. 253
4.34 Award Agreement between the Company and Ronald P. Koegler
dated as of January 1, 1997. 256
5.1 Opinion of Benesch, Friedlander, Coplan & Aronoff LLP,
outside counsel to the Company, regarding legality. 259
23.1 Consent of Ernst & Young LLP, independent public accountants. 261
23.2 Consent of Benesch, Friedlander, Coplan & Aronoff LLP
(contained in its opinion filed as Exhibit 5.1 to this
Registration Statement). *
24.1 Powers of Attorney (included in Part II of this *
Registration Statement).
* Incorporated herein by reference as indicated.
34
RESTATED
ARTICLES OF INCORPORATION
OF
CARDINAL REALTY SERVICES, INC.
FIRST. The name of the corporation is CARDINAL REALTY SERVICES, INC.
(the "Corporation").
SECOND. The principal office of the Corporation in the State of Ohio is
to be located in the City of Columbus, Franklin County.
THIRD. The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be formed under Sections 1701.01 to 1701.98,
inclusive, of the Ohio Revised Code.
FOURTH. The number of shares which the Corporation is authorized to
have outstanding is 15,000,000 shares, consisting of 1,500,000 shares of no par
value Preferred Stock (hereinafter called "Preferred Stock"), and 13,500,000
shares of no par value Common Stock (hereinafter called "Common Stock").
The express terms of the shares of each class are as follows:
Paragraph I - Express Terms of the Preferred Stock
Section 1. The Preferred Stock may be issued from time to time in one
or more series. All shares of Preferred Stock shall be of equal rank and shall
be identical, except in respect of the matters that may be fixed by the
Corporation's directors as hereinafter provided, and each share of each series
shall be identical with all other shares of such series, except that in the case
of series on which dividends are cumulative the dates from which dividends are
cumulative may vary to reflect differences in the date of issue. Subject to the
provisions of this Section, which provisions shall apply to all Preferred Stock,
the directors hereby are authorized to cause such shares to be issued in one or
more series and with respect to each such series prior to the issuance thereof
to fix:
A. The designation of the series which may be by distinguishing number,
letter and/or title.
B. The number of shares of the series, which number the directors may
(except where otherwise provided in the creation of the series) increase or
decrease (but not below the number of shares thereof then outstanding).
C. The dividend rate of the series.
D. The dates at which dividends, if declared, shall be payable, whether
such dividends shall be cumulative or non-cumulative and, if cumulative, the
dates from which dividends shall be cumulative.
E. The redemption rights and price or prices, if any, for shares of the
series.
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35
F. The terms and amount of any sinking fund provided for the purchase
or redemption of shares of the series.
G. The amounts payable on shares of the series in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the affairs
of the Corporation.
H. Whether the shares of the series shall be convertible into shares of
any other class or series of the Corporation, and, if so, the specification of
such other class or series, the conversion price or prices, any adjustments
thereof, the date or dates as of which such shares shall be convertible, and
other terms and conditions upon which such conversion may be made.
I. Restrictions on the issuance of shares of the same series or of any
other class or series.
The Corporation's directors are authorized to adopt from time to time
amendments to these Amended Articles of Incorporation fixing, with respect to
each such series, the matters described in clauses (a) to (i), inclusive, of
this Section.
Section 2. The holders of Preferred Stock of each series, in preference
to the holders of Common Stock and of any other class of shares ranking junior
to the Preferred Stock, shall be entitled to receive out of any funds legally
available and when and as declared by the Corporation's directors dividends in
cash at the rate for such series fixed in accordance with the provisions of
Section 1 of this Paragraph and no more, payable on the dates fixed for such
series. In the event dividends for a series are determined to be cumulative in
accordance with the provisions of Section 1 of this Paragraph, such dividends
shall be cumulative, in the case of shares of each particular series, from and
after the date or dates fixed with respect to such series. No dividends may be
paid upon or declared or set apart for any of the Preferred Stock for any
dividend period unless:
A. as to each series of Preferred Stock entitled to cumulative
dividends, dividends for all past dividend periods shall have been paid or shall
have been declared and a sum sufficient for the payment thereof set apart; and
B. as to all series of Preferred Stock, dividends for the current
dividend period shall have been paid or be or have been declared and a sum
sufficient for the payment thereof set apart ratably in accordance with the
amounts which would be payable as dividends on the shares of the respective
series for the current dividend period if all dividends for the current dividend
period were declared and paid in full.
No dividend in respect of past dividend periods shall be paid upon or
declared and set apart for payment on any of the Preferred Stock entitled to
cumulative dividends unless there shall be or have been declared and set apart
for payment on all outstanding shares of Preferred Stock entitled to cumulative
dividends, dividends for past dividend periods ratably in accordance with the
amounts which would be payable on the shares of the series entitled to
cumulative dividends if all dividends due for all past dividend periods were
declared and paid in full.
2
<PAGE>
36
Section 3. In no event, so long as any Preferred Stock shall be
outstanding, shall any dividends, except a dividend payable in Common Stock or
other shares ranking junior to the Preferred Stock, be paid or declared or any
distribution be made except as aforesaid on the Common Stock or any other shares
ranking junior to the Preferred Stock, nor shall any Common Stock or any other
shares ranking junior to the Preferred Stock be purchased, retired or otherwise
acquired by the Corporation:
A. Unless in each case all accrued and unpaid dividends on Preferred
Stock, including the full dividends for the current dividend period, shall have
been declared and paid or a sum sufficient for payment thereof set apart; and
B. Unless in each case there shall be no arrearages with respect to the
redemption of Preferred Stock of any series from any sinking fund provided for
shares of such series in accordance with the provisions of Section 1 of this
Paragraph.
Section 4.
A. The holders of Preferred Stock of any series, in the event of
voluntary or involuntary liquidation, dissolution or winding up of the affairs
of the Corporation, shall be entitled to receive in full out of the assets of
the Corporation, including its capital, before any amount shall be paid or
distributed among the holders of the Common Stock or any other shares ranking
junior to the Preferred Stock, the amounts fixed with respect to shares of such
series in accordance with Section 1 of this Paragraph, plus an amount equal to
all dividends accrued and unpaid thereon to the date of payment of the amount
due pursuant to such liquidation, dissolution or winding up of the affairs of
the Corporation. In case the net assets of the Corporation legally available
therefor are insufficient to permit the payment upon all outstanding shares of
Preferred Stock of the full preferential amount to which they are respectively
entitled, then such net assets shall be distributed ratably upon outstanding
shares of Preferred Stock in proportion to the full preferential amount to which
each such share is entitled.
After payment to holders of Preferred Stock of the full preferential
amounts as aforesaid, holders of Preferred stock as such shall have no right or
claim to any of the remaining assets of the Corporation.
B. The merger or consolidation of the Corporation into or with any
other corporation, or the merger of any other corporation into the Corporation,
or the sale, lease or conveyance of all or substantially all the property or
business of the Corporation shall not be deemed to be a dissolution, liquidation
or winding up, voluntary or involuntary, for the purposes of this Section 4.
Section 5. Except as otherwise expressly provided herein or as required
by law, the holders of Preferred Stock shall be entitled to vote on all matters
upon which holders of Common Stock have the right to vote and, with respect to
such vote, shall be entitled to notice of any shareholders' meeting in
accordance with the Corporation's Code of Regulations, and shall be entitled to
a number of votes equal to the number of shares of Common Stock into which such
shares of
3
<PAGE>
37
Preferred Stock could then be converted, at the record date for the
determination of shareholders entitled to vote on such matters or, if no such
record date is established, at the date such vote is taken or any written
consent of shareholders is solicited. Except as otherwise expressly provided
herein, or to the extent class or series voting is otherwise required by law or
agreement, the holders of Preferred Stock or Common Stock shall vote together as
a single class and not as separate classes.
Section 6. For the purpose of this Paragraph I, whenever reference is
made to shares "ranking junior to the Preferred Stock," such reference shall
mean and include all shares of the Corporation in respect of which the rights of
the holders thereof as to the payment of dividends and as to distributions in
the event of a voluntary or involuntary liquidation, dissolution or winding up
of the affairs of the Corporation are junior and subordinate to the rights of
the holders of Preferred Stock.
Paragraph II - Express Terms of the Common Stock
The Common Stock shall be subject to the express terms of the Preferred
Stock and of any series thereof. The terms and provisions of each share of
Common Stock shall be identical to every other share of Common Stock. The
holders of shares of Common Stock shall be entitled to one vote for each share
of such stock upon all matters presented to the shareholders.
FIFTH. No holder of any class of shares of the Corporation shall have
any pre-emptive right to purchase or subscribe to any shares or other securities
of the Corporation.
SIXTH. No holder of any class of shares of the Corporation shall be
entitled to vote cumulatively in the election of Directors of the Corporation.
SEVENTH. The Corporation may from time to time, pursuant to
authorization by the Directors and without action by the shareholders, purchase
or otherwise acquire shares of the Corporation of any class or classes in such
manner, upon such terms and in such amounts as the Directors shall determine;
subject, however, to such limitation or restriction, if any, as is contained in
the Articles of Incorporation of the Corporation, including the express terms of
any class of shares of the Corporation outstanding, at the time of the purchase
or acquisition in question.
EIGHTH. The acquisition and transfer of, and the right of any Person to
acquire or transfer, shares of the Corporation shall be subject to the following
restrictions:
Paragraph I - Control Share Acquisition Restrictions.
Except as otherwise provided in this Article EIGHTH, Paragraph I, no
Person shall make a Control Share Acquisition without the prior authorization of
the Corporation's shareholders in accordance with the provisions of this Article
EIGHTH, Paragraph
I.
Section 1. PROCEDURE. In order to obtain authorization of a Control
Share Acquisition by the Corporation's shareholders, a Person who proposes to
make a Control Share Acquisition shall
4
<PAGE>
38
deliver to the Corporation at its principal executive office a notice (the
"Notice") that sets forth all of the following information:
A. The identity of the Person who is giving the Notice;
B. A statement that the Notice is given pursuant to this Article
EIGHTH, Paragraph I;
C. The number and class of shares of the Corporation owned, directly or
indirectly, by the Person who gives the Notice;
D. The range of voting power, described in this Article EIGHTH,
Paragraph I, Section 6 B.(1) under which the proposed Control Share Acquisition
would, if consummated, fall;
E. A description in reasonable detail of the terms of the proposed
Control Share Acquisition; and
F. Reasonable evidence that the proposed Control Share Acquisition, if
consummated, would not be contrary to law and that the Person who is giving the
Notice has the financial capacity to make the proposed Control Share
Acquisition.
Section 2. CALL OF SPECIAL MEETING OF SHAREHOLDERS. The Directors of
the Corporation shall, within twenty (20) days after receipt of such Notice by
the Corporation, call a special meeting of shareholders to be held not later
than fifty (50) days after receipt of the Notice by the Corporation, unless the
Person who delivered the Notice agrees to a later date, to consider the proposed
Control Share Acquisition; provided that the Directors shall have no obligation
to call such meeting (and the proposed Control Share Acquisition need not be
submitted to a vote of shareholders) if the Directors make a determination
within twenty (20) days after receipt of the Notice (i) that the Notice was not
given in good faith, (ii) that the proposed Control Share Acquisition would not
be in the best interests of the Corporation and its shareholders or (iii) that
the proposed Control Share Acquisition could not be consummated for financial or
legal reasons. The Directors may adjourn such meeting if, prior to such meeting,
the Corporation has received a Notice from any other Person and the Directors
have determined that the Control Share Acquisition proposed by such other Person
or a proposed merger, consolidation or sale of assets of the Corporation should
be presented to shareholders contemporaneously with the proposed Control Share
Acquisition at an adjourned meeting or at a special meeting held at a later
date.
Section 3. NOTICE OF SPECIAL MEETING. The Corporation shall, as
promptly as reasonably practicable, give notice of such special meeting to all
shareholders of record as of the record date set for such meeting whether or not
entitled to vote thereat. Such notice shall include or be accompanied by a copy
of the Notice and by a statement of the Corporation, authorized by the
Directors, of its position or recommendation, or that it is taking no position
or making no recommendation, with respect to the proposed Control Share
Acquisition. Section 4. REQUIREMENTS FOR APPROVAL. The Person who delivered the
Notice in respect of which a meeting of shareholders is called by the Directors
may make the proposed Control
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Share Acquisition if both of the following occur: (i) the shareholders of the
Corporation who hold shares of the Corporation entitling them to vote in the
election of Directors authorize such acquisition at the special meeting, at
which a quorum is present, by the affirmative vote of a majority of the voting
power of all outstanding shares of the Corporation entitled to vote in the
election of Directors and of a majority of the portion of such voting power
excluding the voting power of Interested Shares; and (ii) such acquisition is
consummated, in accordance with the terms so authorized, not later than three
hundred and sixty (360) days following shareholder authorization of the Control
Share Acquisition. A quorum shall be deemed to be present at such special
meetings if at least a majority of the voting power of the Corporation in the
election of Directors, and a majority of the portion of such voting power
excluding the voting power of interested Shares, are represented at such meeting
in person or by proxy.
Section 5. VIOLATION OF RESTRICTION. Any transaction or other event
which would, directly or indirectly, result in a Control Share Acquisition by
any Person in violation of this Article EIGHTH, Paragraph I, shall be valid only
with respect to such number of shares as does not result in a violation of this
Article EIGHTH, Paragraph I, and such acquisition or transfer shall be null and
void ab initio with respect to the remainder of such shares (any such remainder
of shares being hereinafter called "Excess Shares"). Until the Excess Shares are
transferred to a Person, if any, whose acquisition thereof will not be null and
void, the purported transferor (the "Purported Transferor") of the Excess Shares
shall continue to own the Excess Shares and have all rights (including all
voting rights and all rights to any dividends or other distributions) incident
to ownership of such Excess Shares, unless (i) the Purported Transferor and the
purported transferee (the "Purported Transferee") may be deemed to have become
one and the same Person, or (ii) the purported acquisition was pursuant to the
Plan of Reorganization of the Corporation in exchange for a Purchased Claim.
If (i) the last clause of the first sentence in the foregoing paragraph
(that is, the clause declaring certain attempted acquisitions or transfers to be
null and void ab initio) is determined to be invalid or unenforceable, (ii) if
the Purported Transferor and Purported Transferee may be deemed to have become
one and the same Person or (iii) the purported acquisition was pursuant to the
Plan of Reorganization in exchange for a Purchased Claim, the Purported
Transferee and any successor who holds Excess Shares shall (i) be conclusively
deemed to have acted as an agent on behalf of the Corporation in acquiring the
Excess Shares and to hold such Excess Shares on behalf of the Corporation and
(ii) deliver to the Corporation forthwith upon demand of the Corporation, all
certificates for such Excess Shares duly endorsed for transfer and cancellation.
As the equivalent of treasury securities for such purposes, the Excess Shares
shall not be entitled to any voting rights, shall not be considered to be
outstanding for quorum or voting purposes, and shall not be entitled to
participate in any dividends, interest or other distribution. Any Person who
receives dividends, interest or any other distribution with respect to Excess
Shares shall hold the same as agent for the Corporation and, following a
permitted transfer, for the transferee thereof. Notwithstanding the foregoing,
any holder of Excess Shares may transfer the same (together with any
distributions thereon) to any Person who, following such transfer, would not own
shares in violation of this Article EIGHTH, Paragraph I. Upon such permitted
transfer, the Corporation shall pay or distribute to the transferee any
distributions on the Excess Shares not previously paid or distributed.
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Section 6. DEFINITIONS. As used in this Article EIGHTH, Paragraph I:
A. "Person" includes, without limitation, an individual, a corporation
(whether non-profit or for profit), a partnership, an unincorporated society or
association, and two or more Persons having a joint or common interest,
including, without limitation, two or more Persons having any understanding,
relationship, agreement or other arrangement with respect to acquiring, holding,
voting or disposing of any shares of the Corporation entitled to vote in the
election of directors.
B. (1) "Control Share Acquisition" means the acquisition, directly or
indirectly, by any Person, of shares of the Corporation that, when added to all
other shares of the Corporation in respect of which such Person may exercise or
direct the exercise of voting power as provided in this Section 6 B.(1), would
entitle such Person, immediately after such acquisition, directly or indirectly,
alone or with others, to exercise or direct the exercise of the voting power of
the Corporation in the election of Directors within any of the following ranges
of such voting power:
(a) One-fifth or more but less than one-third of such
voting power;
(b) One-third or more but less than a majority of such
voting power;
(c) A majority or more of such voting power.
A bank, broker, nominee, trustee, or other Person who acquires shares
in the ordinary course of business for the benefit of others in good faith and
not for the purpose of circumventing this Article EIGHTH shall, however, be
deemed to have voting power only of shares in respect of which such Person would
be able, without further instructions from others, to exercise or direct the
exercise of votes at a meeting of shareholders called under this Article EIGHTH,
Paragraph I. For purposes of this Article EIGHTH, Paragraph I, the acquisition
of securities immediately convertible into shares of the Corporation with voting
power in the election of Directors shall be treated as an acquisition of such
shares.
(2) The acquisition of any shares of the Corporation does not
constitute a Control Share Acquisition for the purpose of this Article EIGHTH,
Paragraph I, if the acquisition was or is consummated in, results from, or is
the consequence of any of the following circumstances:
(a) By underwriters in good faith and not for the purpose
of circumventing this Article EIGHTH, Paragraph I in
connection with an offering of the securities of the
Corporation to the public;
(b) By bequest or inheritance, by operation of law upon
the death of an individual, or by any other transfer
without valuable consideration, including a gift,
that is made in good faith and not for the purpose of
circumventing this Article EIGHTH, Paragraph I;
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(c) Pursuant to the satisfaction of a pledge or other
security interest created in good faith and not for
the purpose of circumventing this Article EIGHTH,
Paragraph I;
(d) Pursuant to a merger or consolidation adopted, or a
combination or majority share acquisition authorized,
by shareholder vote in compliance with the provisions
of these Articles of Incorporation and Section
1701.78, or Section 1701.83, of the Ohio Revised Code
if the Corporation is the surviving or new
corporation in the merger or consolidation or is the
acquiring corporation in the combination or majority
share acquisition and if the vote of shareholders of
the surviving, new, or acquiring corporation is
required by the provisions of Section 1701.78 or
1701.83 of the Ohio Revised Code; or
(e) The acquisition of shares of the Corporation pursuant
to a Plan of Reorganization of the Corporation by any
Person in exchange for a Claim which is not a
Purchased Claim.
The acquisition by any Person of shares of the Corporation in a manner
described under this Section 6 B.(2) shall be deemed to be a Control Share
Acquisition authorized pursuant to this Article EIGHTH, Paragraph I within the
range of voting power under Section 6 B.(1)(a), (b) or (c) of this Article
EIGHTH, Paragraph I that such Person is entitled to exercise after such
acquisition, provided that, in the case of an acquisition in a manner described
under Section 6 B.(2)(b) or (c), the transferor of shares to such Person had
previously obtained any authorization of shareholders required under this
Article EIGHTH in connection with such transferor's acquisition of shares of the
Corporation.
(3) The acquisition of shares of the Corporation in good faith and not
for the purpose of circumventing this Article EIGHTH, Paragraph I from any
Person whose (a) Control Share Acquisition had previously been authorized by
shareholders in compliance with this Article EIGHTH or (b) previous acquisition
of shares would have constituted a Control Share Acquisition but for Section 6
B.(2), does not constitute a Control Share Acquisition for the purpose of this
Article EIGHTH unless such acquisition entitles the Person making such
acquisition, directly or indirectly, alone or with others, to exercise or direct
the exercise of voting power of the Corporation in the election of Directors in
excess of the range of such voting power authorized pursuant to this Article
EIGHTH, or deemed to be so authorized under Section 6 B.(2).
C. "Interested Shares" means shares of the Corporation with respect to
which any of the following Persons may exercise or direct the exercise of the
voting power in the election of Directors:
(1) any Person whose Notice prompted the calling of the meeting of
shareholders;
(2) any officer of the Corporation elected or appointed by the
Directors of the Corporation; and
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(3) any employee of the Corporation who is also a Director of the
Corporation.
D. "Interested Shares" also means any shares of the Corporation
acquired, directly or indirectly, by any Person from the holder or holders
thereof for a valuable consideration during the period beginning with the date
of the first public disclosure of a proposed Control Share Acquisition of the
Corporation or any proposed merger, consolidation, or other transaction that
would result in a change in control of the corporation or all or substantially
all of its assets and ending on the date of any special meeting of the
Corporation's shareholders held thereafter pursuant to this Article EIGHTH,
Paragraph I, for the purpose of voting on a Control Share Acquisition proposed
by any Person if either of the following applies:
(1) The aggregate consideration paid or given by the Person who
acquired the shares, and any other persons acting in concert
with him, for all such shares exceeds two hundred fifty
thousand dollars;
(2) The number of shares acquired by the Person who acquired the
shares, and any other persons acting in concert with him,
exceeds one-half of one percent of the outstanding shares of
the Corporation entitled to vote in the election of Directors.
E. "Plan of Reorganization" means the plan of reorganization of the
Corporation and certain of its substantively consolidated subsidiaries under
Chapter 11 of the United States Bankruptcy Code, duly confirmed by the United
States Bankruptcy Court for the Southern District of Ohio, Eastern Division, in
Case No. 2-89-O2779.
F. "Claim" means a claim against, interest in, or claim for an
administrative expense in the bankruptcy case concerning, the Corporation and
certain of its substantively consolidated subsidiaries, Case No. 2-89-02779,
United States Bankruptcy Court for the Southern District of Ohio, Eastern
Division.
G. "Purchased Claim" means a Claim acquired by a Person by purchase, or
otherwise for a valuable consideration paid, subsequent to the date of initial
filing of the Plan of Reorganization of the Corporation.
Section 7. PROXIES. No proxy appointed for or in connection with the
shareholder authorization of a Control Share Acquisition pursuant to this
Article EIGHTH, Paragraph I is valid if it provides that it is irrevocable. No
such proxy is valid unless it is sought, appointed, and received both:
A. In accordance with all applicable requirements of law; and
B. Separate and apart from the sale or purchase, contract or tender for
sale or purchase, or request or invitation for tender for sale or purchase, of
shares of the Corporation.
Section 8. REVOCABILITY OF PROXIES. Proxies appointed for or in
connection with the shareholder authorization of a Control Share Acquisition
pursuant to this Article EIGHTH,
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Paragraph I shall be revocable at all times prior to the obtaining of such
shareholder authorization, whether or not coupled with an interest.
Paragraph II - Tax Benefit Preservation Restrictions.
Section 1. DEFINITIONS. For the purposes of this Article EIGHTH,
Paragraph II:
A. "To Acquire" means to take action that, but for the provisions of
Section 2 hereof, would be, or, pursuant to Section 2 hereof, is, effective to
purchase or otherwise acquire (whether voluntarily or involuntarily) Stock;
B. "Acquisition" means any transaction pursuant to which Stock would
have been or is Acquired;
C. The meaning of "Act" is set forth in Section 6 hereof;
D. The meaning of "Board" is set forth in Section 2 B. hereof;
E. The meaning of "Carryovers" is set forth in Section 8 hereof;
F. The meaning of "Excess Shares" is set forth in Section 3 A.(l)
hereof;
G. "5-Percent Shareholder" means an individual who is a "5-percent
shareholder" within the meaning of Section 382, provided, however, (l) that any
entity which, if an individual, would be treated as a 5-percent shareholder
pursuant to Section 382 shall be deemed a "5-percent Shareholder" and (2) except
as the Board may otherwise provide in keeping with the purposes of this Article
Eighth, Paragraph II, any person who has received Stock from a 5-Percent
Shareholder, and any person who received Stock as compensation for services,
will be treated as a 5-Percent Shareholder, regardless of such person's actual
ownership of Stock;
H. "Initial Acquisition Stock" means, with respect to each Initial
5-Percent Shareholder, the total amount of Stock issued to such Initial
5-Percent Shareholder through the second anniversary of the Effective Date (as
defined in the Plan of Reorganization) on account of both Allowed Claims (as
defined in the Plan of Reorganization) and Disputed Claims (as defined in the
Plan of Reorganization);
I. "Initial 5-Percent Shareholder" means any Person who is a 5-Percent
Shareholder on the Effective Date, or who becomes a 5-Percent Shareholder on or
before the second anniversary of the Effective Date solely as the result of the
issuance of Stock to him on account of Allowed Claims or Disputed Claims;
J. The meaning of "Permitted Transferee" is set forth in Section 3
A.(1) hereof;
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K. The meaning of "Person" includes the entities set forth in Section
7701(a)(1) of the Internal Revenue Code of 1986, as amended (and any successors
thereto), and shall also include any group of persons treated as an entity under
Section 382;
L. The meaning of "Plan of Reorganization" is that set forth in Section
6 E. of Article EIGHTH, Paragraph I, above;
M. The meaning of "Proceeds" is set forth in Section 3 A.(4) hereof;
N. "Purported Owner" means any Person who Acquires any Stock in any
transaction that would be in violation of any prohibition set forth in Section 2
hereof;
O. The meaning of "Purported Owner's Transferor" is set forth in
Section 3 A.(1) hereof;
P. "Section 382" means Section 382 of the Internal Revenue Code of
1986, as amended, and the regulations promulgated thereunder (and any successors
thereto);
Q. "Share Trustee" means the trustee of the Excess Shares nominated and
appointed by the Board from time to time;
R. "Special Initial Acquisition Stock" means, with respect to each
Initial 5-Percent Shareholder, the portion of the Initial Acquisition Stock
issued to such Initial 5-Percent Shareholder, determined as follows:
(a) with respect to each Initial 5-Percent Shareholder on the
Effective Date, an amount of such Initial Acquisition Stock determined
by multiplying the total number of shares of Initial Acquisition Stock
issued to such Initial 5-Percent Shareholder on the Effective Date by
the fraction (not to exceed one (1)) obtained by dividing six and
two-thirds percent (6-2/3%) by the percentage of all Stock issued on
the Effective Date on account of Allowed Claims and Disputed Claims
that is Initial Acquisition Stock.
(b) with respect to each Initial 5-Percent Shareholder who is
a 5-Percent Shareholder on the first anniversary of the Effective Date,
an amount or additional amount, as the case may be, of such Initial
Acquisition Stock determined by (i) multiplying the total number of
shares of Initial Acquisition Stock which have been issued to such
Initial 5-Percent Shareholder through the first anniversary of the
Effective Date by the fraction (not to exceed one (1)) obtained by
dividing thirteen and one-third percent (13-1/3%) by the percentage of
all Stock issued through the first anniversary of the Effective Date on
account of Allowed Claims and Disputed Claims that is Initial
Acquisition Stock and (ii) subtracting from such amount the total
number of shares of such Initial 5-Percent Shareholder's Initial
Acquisition Stock that have previously been treated as Special Initial
Acquisition Stock by reason of paragraph (a) above. If the amount
determined under this paragraph (b) for any Initial 5-Percent
Shareholder is a negative number, then (x) such negative number shall
not cause any portion of such Initial 5-Percent Shareholder's Initial
Acquisition Stock that was
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previously treated as Special Initial Acquisition Stock to lose its
characterization as Special Initial Acquisition Stock, and (y) the
number of shares of Initial Acquisition Stock of each Initial 5-Percent
Shareholder that would otherwise be treated as Special Initial
Acquisition Stock by reason of the application of this paragraph (b)
shall be reduced by an amount determined by multiplying such negative
number by the fraction determined by dividing the number of shares of
Initial Acquisition Stock of such Initial 5-Percent Shareholder that
would otherwise be treated as Special Initial Acquisition Stock by
reason of the application of this paragraph (b) by the total number of
shares of Initial Acquisition Stock that would otherwise be treated as
Special Initial Acquisition Stock by reason of the application of this
paragraph (b).
(c) with respect to each Initial 5-Percent Shareholder, an
amount or additional amount, as the case may be, of such Initial
Acquisition Stock determined by (i) multiplying the total number of
shares of Initial Acquisition Stock which have been issued to such
Initial 5-Percent Shareholder by the fraction not to exceed one (1)
obtained by dividing twenty percent (20%) by the percentage of all
Stock issued through the second anniversary of the Effective Date on
account of Allowed Claims and Disputed Claims that is Initial
Acquisition Stock and (ii) subtracting from such amount the total
number of shares of such Initial 5-Percent Shareholder's Initial
Acquisition Stock that have previously been treated as Special Initial
Acquisition Stock by reason of paragraphs (a) and (b) above. If the
amount determined under this paragraph (c) for an Initial 5-Percent
Shareholder is a negative number, then (x) such negative number shall
not cause any portion of such Initial 5-Percent Shareholder's Initial
Acquisition Stock that was previously treated as Special Initial
Acquisition Stock to lose its characterization as Special Initial
Acquisition Stock, and (y) the number of shares of Initial Acquisition
Stock of each Initial 5-Percent Shareholder that would otherwise be
treated as Special Initial Acquisition Stock by reason of the
application of this paragraph (c) shall be reduced by an amount
determined by multiplying such negative number by the fraction
determined by dividing the number of shares of Initial Acquisition
Stock of such Initial 5-Percent Shareholder that would otherwise be
treated as Special Initial Acquisition Stock by reason of the
application of this paragraph (c) by the total number of shares of
Initial Acquisition Stock that would otherwise be treated as Special
Initial Acquisition Stock by reason of the application of this
paragraph (c).
(d) For purposes of this Paragraph II, all Transfers of Stock
by an Initial 5-Percent Shareholder shall first be considered to be
Transfers of Special Initial Acquisition Stock until all of the Special
Initial Acquisition Stock held by such Initial 5-Percent Shareholder
has been deemed transferred in accordance with this provision.
S. "Stock" means stock of the Corporation as defined in Section 382,
including any direct or indirect ownership interests in the Corporation which,
pursuant to Section 382, are treated as stock of the Corporation, and any
options (as the term "option" is used in Section 382 but without regard to
whether or not the issuance, sale, transfer, disposition, purchase or
acquisition of any such option would result in an Ownership Change) to sell,
transfer, dispose of, purchase or acquire Stock of the Corporation;
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T. The meaning of "Termination Date" is set forth in Section 2 hereof;
U. To "Transfer" means to take action that, but for the provisions of
Section 2 hereof, would be, or, pursuant to Section 2 hereof, is, effective to
sell, transfer, otherwise dispose of, or, as in the case of an option or other
contingent interest, create, whether voluntarily or involuntarily, Stock, and
also means any transaction pursuant to which Stock would have been or is
Transferred;
V. "Transfer Agent" means the transfer agent or agents with respect to
the Stock designated by the Board of Directors from time to time;
W. The meanings of all other capitalized terms used in this Article
EIGHTH, Paragraph II, and not otherwise defined herein are those set forth in
Section 382..
Section 2. LIMITATIONS ON TRANSFER.
A. Except as otherwise provided in this Article EIGHTH, Paragraph II,
and except for transfers in satisfaction of Disputed Claims as provided in the
Plan, at no time from immediately after the Effective Date (as defined in the
Plan of Reorganization), until December 31, 2007 (the "Termination Date"), shall
any Person
(1)(a) Acquire any Stock if such Person's Acquisition of such
Stock would result in any 5-Percent Shareholder (or any Person who
would be a 5-Percent Shareholder if such Person's Disputed Claims were
to be allowed in full) holding, or being treated under Section 382 as
holding, additional Stock, or (b) Acquire any Stock if such Person's
Acquisition of such Stock would cause any Person to become a 5-Percent
Shareholder, or
(2) Transfer any Stock in a Transfer that would result in any
5-Percent Shareholder Transferring, or being treated under Section 382
as Transferring, Stock; and any Transfer or Acquisition of any Stock in
violation of this Section 2 shall be null and void ab initio, but, in a
case described in Section 2 A.(1)(b) hereof, only as to that portion of
Stock the Transfer or Acquisition of which violates Section 2 A.(1)(b).
B. (1) A Transfer or Acquisition shall not be prohibited and
shall not be null and void under Section 2 A. if (1) the Board of
Directors of the Corporation or a duly authorized committee thereof
(the "Board") duly approves and authorizes such Transfer or Acquisition
prior to such Transfer or Acquisition, which approval and authorization
must be granted unless the Board reasonably determines, as supported by
an opinion of the Corporation's outside tax professionals, both that
(a) the Transfer or Acquisition if permitted would, taken by itself (or
together With any transactions that have previously been effected, and
with any transactions that have not yet been effected but that might be
effected within the limitations of this Article Eighth, Paragraph II),
cause an "ownership change" within the meaning of Internal Revenue Code
Section 382(g) determined as if the percentage point limitation set
forth in Internal Revenue Code Section 382(g)(1)(A) were forty-five
(45) percentage points instead of fifty (50) percentage points (such
trigger event to be adjusted in the event of any change in the
applicable provisions of the Internal Revenue Code or the Treasury
Regulations promulgated pursuant thereto, as may be reasonably
necessary to effectuate the
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purpose of this Paragraph 2), and (b) such ownership change would occur
within two (2) years of the Effective Date (as defined in the Plan of
Reorganization) or would jeopardize the Corporation's ability to
utilize net operating losses, passive activity losses, or any other tax
attributes; or (2) such Stock is Transferred or Acquired by reason of
death, gift, divorce, separation or otherwise and, pursuant to the
terms of Section 382, the transferee of the Stock is treated as owning
such Stock during the period such Stock was owned by the Person from
whom it was acquired. The Board shall make any determination pursuant
to Section 2 B.(1) hereof within forty-five (45) days of (x) the date
the Board has received a written request for such a determination
together with evidence of a firm offer for the Stock to be Transferred
or Acquired or (y) the date the Board has received a written request
for such a determination not accompanied by such evidence of a firm
offer, such written requests without accompanying evidence of a firm
offer to be limited to one (1) request per calendar year for each
Person holding Stock in the Corporation. The Corporation, the Board and
the Directors of the Corporation shall be fully protected in deciding
whether or not to approve and authorize a Transfer or Acquisition
otherwise prohibited by this Article EIGHTH, Paragraph II.
(2) The Board shall take such measures as are feasible to
facilitate the free transferability of Special Initial Acquisition
Stock, even if such measures would have the effect of requiring the
Board to assume in the future that such Special Initial Acquisition
Stock has been Transferred in transactions constituting Owner Shifts
within the meaning of Section 382, thereby limiting the Board's ability
to approve Transfers of stock that is not Special Initial Acquisition
Stock. Such measures may include the legending of Special Initial
Acquisition Stock in such manner as would permit the Transfer of such
stock but subject to special restrictions. For example, if such action
is both feasible and consistent with the best interests of the
Corporation, the Board may, on consultation with the Corporation's
outside tax professionals, permit holders of Special Initial
Acquisition Stock to Transfer such stock generally without limitation,
provided the transferees of such stock neither hold, are deemed to
hold, nor are permitted to Acquire other Stock. As an additional
example, to the extent that the Board, on consultation with the
Corporation's outside tax professionals, deems such action to be
consistent with the best interests of the Corporation, the Board may
seek advice from the Internal Revenue Service, including advice by
private letter ruling, designed to facilitate the maximum feasible free
transferability of Special Initial Acquisition Stock.
Section 3. TREATMENT OF DISALLOWED TRANSFERS.
A. If, notwithstanding the foregoing prohibition, a Person shall,
voluntarily or involuntarily, become a Purported Owner of Stock in an
Acquisition described by Section 2 A.(1) of this Article EIGHTH, Paragraph II,
and that is null and void pursuant to Section 2 of this Article EIGHTH,
Paragraph II, then:
(1) Notwithstanding any other provision of this Section 3 A.,
the Purported Owner shall not obtain any rights In and to any such
Stock that has been Acquired in such an Acquisition to the extent of
the number of shares or amount of Stock that causes such Acquisition to
be so null and void (the "Excess Shares"), and the Transfer of the
Excess Shares to the Purported Owner shall not be recognized by the
Corporation, the Transfer Agent or any other agent of the Corporation.
Until the Excess Shares are Transferred to a Person, if any, whose
Acquisition thereof will not be null and void (a "Permitted
Transferee"), the Transferor of the Excess Shares to the
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Purported Owner (the "Purported Owner's Transferor") shall continue to
own the Excess Shares and have all rights, including all voting rights
and all rights to any dividends or other distributions, liquidating or
otherwise, incident to ownership of such Excess Shares. All Excess
Shares will continue to be issued and outstanding.
(2) If the Transfer Agent obtains possession of any
certificate or other evidence of purported ownership representing any
Excess Shares, the Transfer Agent shall deliver such certificate or
other evidence to the Share Trustee in trust for the benefit of the
Purported Owner's Transferor, and such Share Trustee shall proceed
forthwith to attempt to sell or cause the sale of the Excess Shares to
a Permitted Transferee. The Share Trustee shall take all lawful action
to cause the Purported Owner to deliver or cause delivery of the Excess
Shares and any indicia of ownership thereof to the Share Trustee. The
Purported Owner shall to the Share Trustee and, upon obtaining
possession thereof, the Share Trustee shall proceed forthwith to
attempt to sell or cause the sale of the Excess Shares to a Permitted
Transferee. The Share Trustee shall attempt to sell or cause the sale
of the Excess Shares in the then existing public market or in such
other commercially reasonable fashion as the Corporation shall direct.
In performing the duties herein imposed upon it, the Share Trustee
shall act at all times as the agent of the Purported Owner's
Transferor.
(3) Once the Excess Shares are Acquired by a Permitted
Transferee, the Permitted Transferee shall have and shall be entitled
to exercise all rights incident to the ownership of such Excess Shares
from the date of the Acquisition thereof by the Permitted Transferee;
and
(4) The Proceeds from the sale of the Excess Shares to the
Permitted Transferee (the "Proceeds") shall be distributed as follows:
(i) first, to the Share Trustee, the Transfer Agent and the Corporation
for all costs incurred in respect of the administration and sale of the
Excess Shares (and in the event that the Proceeds are insufficient to
reimburse the Share Trustee, the Transfer Agent and the Corporation for
all costs incurred in respect of the administration and sale of the
Excess Shares the Purported Owner shall reimburse the Share Trustee,
the Transfer Agent and the Corporation for such costs), (ii) second, to
the Purported Owner, if known, in an amount up to the amount paid by
the Purported Owner, if determinable, for the Excess Shares, and (iii)
third, to the Purported Owner's Transferor, if known, and if not known,
to the Corporation for the benefit of the Purported Owner's Transferor.
Notwithstanding anything in this Article EIGHTH, Paragraph II, to the
contrary the Corporation shall at all times be entitled to make
application to any court of equitable jurisdiction within the State of
Ohio for an adjudication of the respective rights and interests of any
Person in and to the Proceeds or any portion thereof, pursuant to this
Article EIGHTH, Paragraph Il, and applicable law, and for leave to pay
the Proceeds or any portion thereof into such court.
B. (1) If a Person shall, voluntarily or involuntarily,
Transfer any Stock the Transfer of which is described by Section 2 A.
(2) hereof and the Transfer of which is null and void pursuant to
Section 2 hereof, then:
(a) The Purported Owner of such Transferred Stock
shall not obtain any rights in and to any such Stock; and
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49
(b) The Person Transferring such Stock shall be
liable for any and all losses, costs and damages suffered by
the Corporation, the Transfer Agent, the Share Trustee, the
Purported Owner and any other party to the prohibited
Transfer.
(2) In any case in which a Transfer of Stock would be null and
void pursuant to Section 2, and would be described in both the Section
2 A.(l) prohibition on Acquisitions and the Section 2 A.(2) prohibition
on Transfers, then, notwithstanding anything to the contrary contained
in this Article EIGHTH, Paragraph II, the terms of Section 3 A. of this
Article EIGHTH, Paragraph II, shall not apply and the Transfer shall be
governed by the terms of this Section 3 B. of this Article EIGHTH,
Paragraph II.
Section 4. REQUIREMENT OF NOTICE. Immediately upon the Transfer or
Acquisition of any Stock in violation of Section 2 hereof, the Purported Owner
and the Purported Owner's Transferor thereof shall give, or cause to be given,
written notice thereof to the Corporation. Each owner of Stock shall furnish to
the Corporation all information reasonably requested with respect to all Stock
in which such Person has a direct or indirect ownership interest (both as
defined in Section 382).
Section 5. ACTIONS BY BOARD. Upon a determination by the Board that a
Person has Acquired or Transferred, or may Acquire or Transfer, Stock in
violation of Section 2 hereof, the Board may take such action as it deems
advisable to prevent any such Transfer or Acquisition and to refuse to give
effect to such Transfer or Acquisition on the books and records of the
Corporation, including, without limitation, to cause the Transfer Agent to
refuse to record the Purported Owner as the record owner of such Stock, to
refuse to issue Stock upon the exercise or purported or attempted exercise of
options to Acquire Stock (which options constitute Stock that has been
Transferred or Acquired in violation of Section 2 of this Article EIGHTH,
Paragraph II), and to institute proceedings to enjoin any such Transfer or
Acquisition.
Section 6. BOARD'S RELIANCE ON CERTAIN FILINGS. Pursuant to Section
382, in determining whether any Person has become a Purported Owner, the
Corporation, the Transfer Agent and the Share Trustee are each entitled to rely
on the existence and absence of filings on Schedules 13D and 13G (or any similar
schedules), to the extent such filings are required by Rule 13d-1 under the
Securities Exchange Act of 1934, as amended (the "Act"), and any successor rule,
regulation or statute, to identify any Person who is a 5-Percent Shareholder,
and the existence or absence of any amendment to Schedules 13D and 13G showing
any material increase or decrease in the percentage of Stock owned by such
Person, as required by Rule 13d-2 under the Act. The Board shall be fully
protected in relying on the items set forth in the foregoing sentence, together
with such other items or sources of information as may be required or permitted
from time to time by Section 382 or as available to the Corporation, to
determine whether any Person has become or is attempting to become a Purported
Owner of Stock.
Section 7. SEVERABILITY. If any provision of this Article EIGHTH,
Paragraph II, or any application of any such provision is determined to be
invalid by any federal or state court having jurisdiction to make such a
determination, the remaining provisions will remain valid and other applications
of such provision shall be affected only to the extent necessary to comply with
the
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50
determination of such court, and this Article EIGHTH, Paragraph II, will be
construed, in the absence of such provision, to give effect to the purpose of
this Article EIGHTH, Paragraph II, to the maximum extent possible.
Section 8. PURPOSES OF THIS PARAGRAPH. The purpose of this Article
EIGHTH, Paragraph II, is to facilitate the Corporation's ability to preserve and
utilize net operating losses, passive activity losses and other tax attributes
to which the Corporation, in the absence of limitations, is entitled from time
to time under the Internal Revenue Code of 1986, as amended (the "Carryovers"),
and to that end the Board is authorized to take such action, to the extent
permitted by law and not inconsistent with this Article EIGHTH, Paragraph II, as
it may deem necessary or advisable to protect the Corporation and the interests
of holders of its equity and debt securities by preservation of the
Corporation's ability to preserve and utilize its Carryovers.
Section 9. REGULATIONS AND PROCEDURES OF BOARD. The Board may, to the
extent permitted by law, from time to time establish, modify, amend or rescind,
by regulation, bylaw or otherwise, regulations and procedures not inconsistent
with the provisions of this Article EIGHTH, Paragraph II, for determining
whether any Acquisition or Transfer of Stock would jeopardize the Corporation's
ability to preserve and utilize its Carryovers and for the orderly application,
administration and implementation of the provisions of this Article EIGHTH,
Paragraph II. Such procedures and regulations shall be kept on file with the
Secretary of the Corporation and with its Transfer Agent and shall be made
available for inspection by the public and, upon request, shall be mailed to any
registered holder of Stock of the Corporation.
Section 10. ACCELERATION OF TERMINATION DATE. Notwithstanding the
provisions of this Article EIGHTH, Paragraph II, and its purposes, at least once
annually, the Board shall consider whether the tax benefit preservation
restrictions set forth in this Paragraph II continue to be necessary to ensure
the utilization by the Corporation of its net operating losses, passive activity
losses or any other tax attributes. If the Board determines, after
consideration, that such restrictions are no longer necessary, the Board shall
by resolution accelerate the Termination Date to an earlier date. In the event
the Board accelerates the Termination Date, the Corporation shall notify all
registered holders of Stock of the Corporation, and provide a copy of the notice
to all stock exchanges on which the Corporation's Stock is then listed and to
the Transfer Agent.
Section 11. VALIDITY OF TRANSFERS APPROVED BY BOARD. The provisions of
this Article EIGHTH, Paragraph II, shall not restrict, prohibit or affect the
validity of any Transfer or Acquisition of Stock approved by the Board.
Section 12. ADDITIONAL LEGEND. All certificates evidencing ownership of
shares of Stock shall bear, immediately below, and in addition to, the legend
prescribed by Article EIGHTH, Paragraph IV, the following two conspicuous
legends:
"ANY TRANSFER OR ACQUISITION OR PURPORTED OR ATTEMPTED TRANSFER OR
ACQUISITION OF ANY OF THE SHARES OF STOCK REPRESENTED HEREBY IN
VIOLATION OF SUCH RESTRICTIONS SHALL BE NULL AND VOID AB INITIO. FOR
PURPOSES OF THE RESTRICTIONS, `TRANSFERS' OF STOCK GENERALLY
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51
INCLUDE, IN ADDITION TO SALES OR OTHER DISPOSITIONS, THE PLEDGING OF
STOCK AND THE GRANTING OF OPTIONS TO ACQUIRE, OR OTHER CONTINGENT
RIGHTS IN, STOCK; AND `ACQUISITIONS' OF STOCK GENERALLY INCLUDE, IN
ADDITION TO THE RECEIPT OF STOCK PURSUANT TO SALES OR OTHER TRANSFERS,
THE RECEIPT OF RIGHTS UNDER PLEDGES, OPTIONS, OR OTHER CONTINGENT
INTERESTS IN STOCK.
IF THE HOLDER OF THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE IS
A 5-PERCENT SHAREHOLDER AS DEFINED IN ARTICLE EIGHTH OF THE
CORPORATION'S ARTICLES OF INCORPORATION, THE HOLDER OF THE SHARES OF
STOCK REPRESENTED HEREBY GENERALLY IS PROHIBITED FROM ACQUIRING ANY
ADDITIONAL SHARES OF STOCK OF THE CORPORATION AND IS PROHIBITED FROM
ACQUIRING ANY OPTIONS TO PURCHASE OR ANY OTHER CONTINGENT INTERESTS IN
SHARES OF STOCK OF THE CORPORATION, ABSENT APPROVAL AND AUTHORIZATION
BY THE BOARD OF DIRECTORS OF THE CORPORATION PURSUANT TO ARTICLE EIGHTH
OF THE CORPORATION'S ARTICLES OF INCORPORATION. A 5-PERCENT SHAREHOLDER
INCLUDES, WITHOUT LIMITATION, ANY PERSON WHO HAS RECEIVED ANY STOCK
FROM A 5-PERCENT SHAREHOLDER, AND ANY PERSON WHO HAS RECEIVED ANY STOCK
AS COMPENSATION FOR SERVICES. IN ADDITION, VARIOUS ATTRIBUTION RULES,
SUCH AS RULES AGGREGATING THE OWNERSHIP OF STOCK OF THE SAME FAMILY OR
MEMBERS OF GROUPS OF RELATED ENTITIES, MAY APPLY IN DETERMINING WHETHER
A PERSON IS A 5-PERCENT SHAREHOLDER."
Paragraph III - Amendments.
Notwithstanding any other provisions of these Articles of Incorporation
or the Regulations of the Corporation, as the same may be in effect from time to
time, or any provision of law that might otherwise permit a lesser vote of the
Directors or shareholders, but in addition to any affirmative vote of the
Directors or the holders of any particular class or series of shares required by
law, the Articles of Incorporation or the Regulations of the Corporation, as the
same may be in effect from time to time, the affirmative vote of at least eighty
(80) percent of the voting power of all outstanding shares of the Corporation
entitled to vote in the election of Directors shall be required to alter, amend
or repeal this Article EIGHTH or to adopt any provisions in the Articles of
Incorporation or Regulations of the Corporation, as the same may be in effect
from time to time, which are inconsistent with the provisions of this Article
EIGHTH.
Paragraph IV - Legend on Share Certificates.
Each certificate representing shares of the Corporation's capital stock
shall contain the following legend:
"TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
THE RESTRICTIONS AND OTHER PROVISIONS OF ARTICLE EIGHTH OF THE
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52
CORPORATION'S ARTICLES OF INCORPORATION AS THE SAME MAY BE IN EFFECT
FROM TIME TO TIME. UPON WRITTEN REQUEST DELIVERED TO THE SECRETARY OF
THE CORPORATION AT ITS PRINCIPAL PLACE OF BUSINESS, THE CORPORATION
WILL MAIL TO THE HOLDER OF THIS CERTIFICATE A COPY OF SUCH ARTICLE
EIGHTH WITHOUT CHARGE WITHIN FIVE (5) DAYS AFTER RECEIPT OF WRITTEN
REQUEST THEREFOR. BY ACCEPTING THIS CERTIFICATE THE HOLDER HEREOF
ACKNOWLEDGES THAT IT IS ACCEPTING SAME SUBJECT TO THE PROVISIONS OF
SAID ARTICLE EIGHTH AS THE SAME MAY BE IN EFFECT FROM TIME TO TIME AND
COVENANTS WITH THE CORPORATION AND EACH SHAREHOLDER THEREOF FROM TIME
TO TIME TO COMPLY WITH THE PROVISIONS OF SAID ARTICLE EIGHTH AS THE
SAME NAY BE IN EFFECT FROM TIME TO TIME."
NINTH. The provisions of Section 1701.831 of the Ohio Revised Code, as
amended from time to time, or any successor provision or provisions to said
sections, shall not apply with respect to any particular Control Share
Acquisition, as such is defined in said Section, regarding this Corporation so
long as Article EIGHTH of these Articles of Incorporation, as such Articles of
Incorporation may be amended from time to time, remains an Article of these
Articles of Incorporation and remains substantially in full force end effect,
disregarding any rendering of such Article EIGHTH resulting from any amendment
of these Articles of Incorporation.
TENTH. Except as otherwise provided in Article EIGHTH or in the further
provisions of this Article TENTH, notwithstanding any provision of the Ohio
Revised Code now or hereafter in force requiring for any purpose the vote,
consent, waiver or release of the holders of shares entitling them to exercise
two-thirds or any other proportion, of the voting power of the Corporation or of
any class or classes of shares thereof, such action may be taken by the vote,
consent, waiver or release of the holders of shares entitling them to exercise a
majority of the voting power of the Corporation or of such class or classes. The
foregoing shall not apply to shareholder action taken under Chapter 1704 of the
Ohio Revised Code, as such Chapter may be amended from time to time.
Section 1. REQUIREMENTS FOR APPROVAL. In addition to any affirmative
vote required by law or these Articles of Incorporation, any Related Party
Transaction shall require the affirmative vote of not less than both eighty
percent (80%) of the voting power of all outstanding shares of the Corporation
entitled to vote in the election of Directors and of sixty-six and two-thirds
percent (66 2/3%) of the portion of such voting power excluding the voting power
of Interested Shares.
Section 2. EXCEPTION. The provisions of Section 1 of this Article TENTH
shall not be applicable if the Continuing Directors of the Corporation by a
two-thirds vote have expressly approved the Related Party Transaction.
Section 3. DEFINITIONS. For the purpose of this Article TENTH:
(a) The term "Related Party Transaction" shall mean (i) any
merger or consolidation of the Corporation or a Subsidiary with a
Related Party, irrespective of which party, if either,
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53
is the surviving party, (ii) any sale, purchase, lease, exchange,
transfer, or other transactions (or series of transactions) between the
Corporation or a Subsidiary and a Related Party involving the
acquisition or disposition of assets for consideration of $3,000,000 or
more in value (except for transactions in the ordinary course of the
Corporation's business), (iii) the issuance or transfer by the
Corporation or a Subsidiary of any securities of the Corporation or of
a Subsidiary to a Related Party (other than an issuance or transfer of
securities which is effected (A) on a pro rata basis to all
shareholders of the Corporation or (B) pursuant to a Plan of
Reorganization of the Corporation to any Person in exchange for a
Claim), (iv) any reclassification of securities of the Corporation
(including any reverse stock split) or any recapitalization or other
transaction involving the Corporation or its Subsidiaries that would
have the effect of increasing the voting power of a Related Party,
except for any mandatory redemption required by the terms of
outstanding securities, or (v) the adoption of any plan or proposal for
the liquidation or dissolution of the Corporation in favor of which a
Related Party votes its shares.
(b) The term "Related Party" shall mean (i) any individual,
corporation, partnership, or other Person, group or entity which,
together with its Affiliates and Associates, is the beneficial owner of
five percent (5%) or "more of the voting power of the Corporation in
the election of Directors or (ii) any such Affiliate or Associate.
(c) A Person shall be a "beneficial owner" of any shares of
the Corporation entitled to vote generally in the election of
Directors:
(i) Which such Person or any of its Affiliates or
Associates beneficially owns, directly or indirectly; or
(ii) Which such Person or any of its Affiliates or
Associates has (a) the right to acquire (whether such right is
exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding or
upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (b) the right to vote
pursuant to any agreement, arrangement or understanding; or
(iii) Which are beneficially owned, directly or
indirectly, by any other Person with which such Person or any
of its Affiliates or Associates has any agreement, arrangement
or understanding for the purpose of acquiring, holding, voting
or disposing of any such shares.
(d) The terms "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of the General
Rules and Regulations under the Securities Exchange Act of 1934, as in
effect on January 1, 1992 (or any subsequent provisions replacing such
Act, Rules or Regulations).
(e) The term "Subsidiary" shall mean any Affiliate of the
Corporation more than fifty percent (50%) of the outstanding securities
of which representing the right, other than
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54
as affected by events of default, to vote for the election of Directors
is owned by the Corporation or by another Subsidiary (or both).
(f) The term "Continuing Director" shall mean a Director who
either (i) was a member of the Board of Directors of the Corporation
immediately prior to the time that the Related Party involved in a
Related Party Transaction became a Related Party, or (ii) was
designated (before his or her initial election as a Director) as a
Continuing Director by a majority of the then Continuing Directors.
(g) The term "Interested Shares" shall mean shares of the
Corporation with respect to which any of the following Persons may
exercise or direct the exercise of the voting power in the election of
Directors:
(1) any Related Party involved in the Related Party
Transaction which is the subject of the vote of shareholders;
(2) any officer of the Corporation elected or
appointed by the Directors of the Corporation; and
(3) any employee of the Corporation who is also a
Director of the Corporation.
(h) The term "Plan of Reorganization" shall mean the plan of
reorganization of the Corporation and certain of its substantively
consolidated subsidiaries under Chapter 11 of the United States
Bankruptcy Code, duly confirmed by the United States Bankruptcy Court
for the Southern District of Ohio, Eastern Division, in Case No.
2-89-02779.
(i) The term "Claim" shall mean a claim against, interest in,
or claim for an administrative expense in the bankruptcy case
concerning, the Corporation and certain of its substantively
consolidated subsidiaries, Case No. 2-89-02779, United States
Bankruptcy Court for the Southern District of Ohio, Eastern Division.
(j) "Person" includes, without limitation, an individual, a
corporation (whether nonprofit or for profit), a partnership, an
unincorporated society or association, and two or more Persons having a
joint or common interest.
Section 4. A majority of the Continuing Directors shall have the power
and duty to determine conclusively for the purposes of this Article TENTH, on
the basis of information known to them, (a) whether a Person is a Related Party,
(b) whether a Person is an Affiliate or Associate of another, (c) whether a
transaction between the Corporation or a Subsidiary and a Related Party involves
the acquisition or disposition of assets for consideration of $3,000,000 or more
in value, and (d) such other matters with respect to which a determination or
interpretation is required under this Article TENTH.
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Section 5. FIDUCIARY OBLIGATIONS UNAFFECTED. Nothing contained in this
Article TENTH shall be construed to relieve any Related Party from any fiduciary
obligation imposed by law.
Section 6. AMENDMENTS. Notwithstanding any other provisions of these
Articles of Incorporation or the Regulations of the Corporation, as the same may
be in effect from time to time, or any provision of law which might otherwise
permit a lesser vote of the Directors or shareholders, but in addition to any
affirmative vote of the Directors or the holders of any particular class or
series of shares required by law, these Articles of Incorporation or Regulations
of the Corporation, as the same may be in effect from time to time, the
affirmative vote of at least eighty percent (80%) of the voting power of all
outstanding shares of the Corporation entitled to vote in the election of
Directors shall be required to alter, amend or repeal this Article TENTH or
adopt any provisions in the Articles of Incorporation or Regulations of the
Corporation, as the same may be in effect from time to time, which are
inconsistent with the provisions of this Article TENTH; provided, however, that
if any such amendment, alteration or repeal of, or adoption of provisions
inconsistent with, this Article TENTH is first approved by the affirmative vote
of two-thirds of the Continuing Directors of the Corporation, the affirmative
vote of a majority of the voting power of all outstanding shares of the
Corporation in the election of Directors shall be sufficient to approve any such
amendment, alteration or repeal of, or adoption of provisions inconsistent with,
this Article TENTH.
ELEVENTH. Any and every statute of the State of Ohio hereafter enacted,
whereby the rights, powers or privileges of corporations or of the shareholders
of corporations organized under the laws of the State of Ohio are increased or
diminished or in any way affected, or whereby effect is given to the action
taken by any number, less than all, of the shareholders of any such corporation,
shall apply to the Corporation and shall be binding not only upon the
Corporation but upon every shareholder of the Corporation to the same extent as
if such statute had been in force at the date of filing these Articles of
Incorporation of the Corporation in the office of the Secretary of State of
Ohio.
TWELFTH. Notwithstanding anything contained in these Articles of
Incorporation to the contrary, the Corporation will not issue nonvoting equity
securities to the extent prohibited by Section 1123 of the United States
Bankruptcy Code as in effect on the effective date of the Plan of Reorganization
of the Corporation and certain of its substantively consolidated subsidiaries,
duly confirmed by the United States Bankruptcy Court for the Southern District
of Ohio, Eastern Division, in Case No. 2-89-02779; provided however, that this
Article TWELFTH (a) will have no further force and effect beyond that required
under Section 1123 of the United States Bankruptcy Code, (b) will have such
force and effect, if any, only for so long as such Section is in effect and
applicable to the Corporation, and (c) in all events may be amended or
eliminated in accordance with applicable law as from time to time in effect.
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56
AMENDED AND RESTATED
1992 INCENTIVE EQUITY PLAN
EFFECTIVE NOVEMBER 30, 1995
<PAGE>
57
AMENDED AND RESTATED
1992 INCENTIVE EQUITY PLAN
Table of Contents
PAGE
1. Purpose..................................................................1
2. Definitions..............................................................1
3. Shares Available Under the Plan..........................................3
4. Option Rights............................................................3
5. Restricted Shares........................................................5
6. Deferred Shares..........................................................6
7. Automatic Grants of Nonqualified Stock Options
to Nonemployee Directors...............................................7
8. Transferability..........................................................8
9. Adjustments..............................................................8
10. Fractional Shares........................................................8
11. Withholding Taxes........................................................8
12. Certain Terminations of Employment, Hardship
and Approved Leaves of Absence...........................................9
13. Administration of the Plan...............................................9
14. Amendments and Other Matters.............................................9
<PAGE>
58
1992 INCENTIVE EQUITY PLAN
1. PURPOSE. The purpose of this Plan is to attract and retain
Directors, officers and key employees for Cardinal Realty Services, Inc.,
formerly known as Cardinal Industries, Inc., an Ohio corporation (the
"Corporation"), and its Subsidiaries following the Effective Date of the
Corporation's Plan of Reorganization and to provide such persons with incentives
and rewards for superior performance.
2. DEFINITIONS. As used in this Plan,
"BOARD" means the Board of Directors of the Corporation.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
"COMMITTEE" means the committee described in Section 13(a)
of this Plan.
"COMMON SHARES" means (i) shares of the common stock of the
Corporation, without par value, and (ii) any security into which Common Shares
may be converted by reason of any transaction or event of the type referred to
in Section 9 of this Plan.
"DATE OF GRANT" means the date specified by the Committee on which a
grant of Option Rights or an award or sale of Restricted Shares or Deferred
Shares shall become effective, which shall not be earlier than the date on which
the Committee takes action with respect thereto, including the date on which an
automatic grant of options to a Nonemployee Director becomes effective pursuant
to Section 7 of this Plan.
"DEFERRAL PERIOD" means the period of time during which Deferred Shares
are subject to deferral limitations under Section 6 of this Plan.
"DEFERRED SHARES" means an award pursuant to Section 6 of this Plan of
the right to receive Common Shares at the end of a specified Deferral Period.
"EFFECTIVE DATE" means the date which is the Effective Date as defined
in the Plan of Reorganization.
"MANAGEMENT OBJECTIVES" means any achievement or performance objectives
established pursuant to this Plan for Participants who have received awards of
Restricted Shares or Deferred Shares.
"MARKET VALUE PER SHARE" means the fair market value of the Common
Shares as determined by the Committee from time to time, which may be in the
form of a fixed dollar amount or a formula to determine the same.
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59
"NONEMPLOYEE DIRECTOR" means a member of the Board who is not an
employee of the Corporation or any Subsidiary.
"OPTIONEE" means the person so designated in an agreement evidencing an
outstanding Option Right.
"OPTION PRICE" means the purchase price payable upon the exercise of an
Option Right, which may be in the form of a fixed dollar amount or a formula to
determine the same.
"OPTION RIGHT" means the right to purchase Common Shares upon exercise
of an option granted pursuant to Section 4 or 7 of this Plan.
"PARTICIPANT" means a person who is selected by the Committee to
receive benefits under this Plan and (i) is at that time an officer, including
without limitation an officer who may also be a member of the Board, or other
key employee of the Corporation or any one or more of its Subsidiaries or (ii)
has agreed to commence serving in any of such capacities.
"PLAN OF REORGANIZATION" means the Plan of Reorganization of Jay Alix,
Chapter 11 Trustee for the Corporation and its substantively consolidated
subsidiaries, as approved by the United States Bankruptcy Court for the Southern
District of
Ohio, Eastern Division.
"RELOAD OPTION RIGHTS" means additional Option Rights granted
automatically to an Optionee upon the exercise of Option Rights pursuant to
Section 4(f) of this Plan.
"RESTRICTED SHARES" mean Common Shares awarded or sold pursuant to
Section 5 of this Plan as to which neither the substantial risk of forfeiture
nor the restrictions on transfer referred to in Section 5 hereof has expired.
"RULE 16B-3" means Rule 16b-3 of the Securities and Exchange Commission
promulgated under Section 16 of the Securities Exchange Act of 1934, as amended
(or any successor rule to the same effect), as in effect from time to time.
"SUBSIDIARY" means a corporation, partnership, joint venture,
unincorporated association or other entity in which the Corporation has a direct
or indirect ownership or other equity interest of more than fifty percent (50%).
"TOTAL COMMITTED EQUITY" means the total number of Common Shares (i)
issued upon or following the Effective Date upon the allowance of Claims
pursuant to the Plan of Reorganization, and (ii) issued or reserved for issuance
pursuant to this Plan as of September 11, 1992.
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60
3. SHARES AVAILABLE UNDER THE PLAN. Subject to adjustment as provided
in Section 9 of this Plan, the number of Common Shares which may be issued or
transferred pursuant to this Plan either (a) upon the exercise of Option Rights
or (b) as Restricted Shares or Deferred Shares, shall not in the aggregate
exceed twelve percent (12%) of the Corporation's Total Committed Equity; and
such Common Shares may be of original issuance or Common Shares held in treasury
or a combination thereof. Notwithstanding the foregoing provisions of this
Section: (a) an additional two hundred thousand (200,000) Common Shares may be
issued or transferred pursuant to Sections 4, 5 or 6 of this Plan to employee
Participants either upon the exercise of Option Rights or as Restricted Shares
or Deferred Shares; and (b) an additional fifty thousand (50,000) Common Shares
may be issued or transferred pursuant to Section 7 of this Plan to Nonemployee
Directors. The additional shares available pursuant to the preceding sentence
shall not be subject to the restrictions set forth in Sections 4(l), 5(h), 6(f)
or 7(d) as amended from time to time.
4. OPTION RIGHTS. The Committee may from time to time authorize grants
to Participants of options to purchase Common Shares upon such terms and
conditions as the Committee may determine in accordance with the following
provisions:
(a) Each grant shall specify the number of Common Shares or
percentage of the Corporation's Total Committed Equity to which it
pertains.
(b) Each grant shall specify an Option Price per Common Share,
which shall be equal to or greater than the Market Value per Share on
the Date of Grant or date or dates thereafter as of which, or on the
basis of which, such Option Price is determined.
(c) Each grant shall specify the form of consideration to be
paid in satisfaction of the Option Price and the manner of payment of
such consideration, which may include (i) cash in the form of currency
or check or other cash equivalent acceptable to the Corporation, (ii)
nonforfeitable, unrestricted Common Shares, which are already owned by
the Optionee and have a value at the time of exercise that is equal to
the Option Price, (iii) any other legal consideration that the
Committee may deem appropriate, including without limitation any form
of consideration authorized under Section 4(d) below, on such basis as
the Committee may determine in accordance with this Plan and (iv) any
combination of the foregoing.
(d) On or after the Date of Grant of any Option Rights, the
Committee may determine that payment of the Option Price may also be
made in whole or in part in the form of Restricted Shares or other
Common Shares that are subject to risk of forfeiture or restrictions on
transfer. Unless otherwise determined by the Committee on or after the
Date of Grant, whenever any Option Price is paid in whole or in part by
means of any of the forms of consideration specified in this Section
4(d), the Common Shares received by the Optionee upon the exercise of
the Option Rights shall be subject to the same risks of forfeiture or
restrictions on transfer as those that applied to the consideration
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61
surrendered by the Optionee; provided, however, that such risks of
forfeiture and restrictions on transfer shall apply only to the same
number of Common Shares received by the Optionee as applied to the
forfeitable or restricted Common Shares surrendered by the Optionee.
(e) Any grant may provide for deferred payment of the Option
Price from the proceeds of sale through a bank or broker of some or all
of the Common Shares to which the exercise relates.
(f) On or after the Date of Grant of any Option Rights, the
Committee may provide for the automatic grant to the Optionee of Reload
Option Rights upon the exercise of Option Rights, including Reload
Option Rights, for Common Shares or any other noncash consideration
authorized under Sections 4(c) and (d) above.
(g) Successive grants may be made to the same Participant
regardless of whether any Option Rights previously granted to such
Participant remain unexercised.
(h) Each grant shall specify the period or periods of
continuous employment of the Optionee by the Corporation or any
Subsidiary that are necessary before the Option Rights or installments
thereof shall become exercisable, and any grant may provide for the
earlier exercise of such rights in the event of a change in control of
the Corporation or other similar transaction or event.
(i) Option Rights granted under this Plan may be (i) options
that are intended to qualify under particular provisions of the Code,
(ii) options that are not intended to so qualify or (iii) combinations
of the foregoing.
(j) No Option Right granted under this Plan may be exercised
more than ten (10) years from the Date of Grant.
(k) Each grant shall be evidenced by an agreement, which shall
be executed on behalf of the Corporation by any officer thereof and
delivered to and accepted by the Optionee and shall contain such terms
and provisions as the Committee may determine consistent with this
Plan.
(l) Common Shares representing, in the aggregate, not more
than one and three-quarters percent (1-3/4%) of the Corporation's Total
Committed Equity may be issued or transferred upon the exercise of
Option Rights granted pursuant to this Section 4.
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5. RESTRICTED SHARES. The Committee may also authorize awards or sales
to Participants of Restricted Shares upon such terms and conditions as the
Committee may determine in accordance with the following provisions:
(a) Each award or sale shall constitute an immediate transfer
of the ownership of Common Shares to the Participant in consideration
of the performance of services, entitling such Participant to dividend,
voting and other ownership rights, subject to the substantial risk of
forfeiture and restrictions on transfer hereinafter referred to.
(b) Each award or sale may be made without additional
consideration from the Participant or in consideration of a payment by
the Participant that is less than the Market Value per Share on the
Date of Grant.
(c) Each award or sale shall provide that the Restricted
Shares covered thereby shall be subject to a "substantial risk of
forfeiture," within the meaning of Section 83 of the Code for a period
to be determined by the Committee on the Date of Grant, and any award
or sale may provide for the earlier termination of such period in the
event of a change in control of the Corporation or other similar
transaction or event.
(d) Each award or sale shall provide that, during the period
for which such substantial risk of forfeiture is to continue, the
transferability of the Restricted Shares shall be prohibited or
restricted in the manner and to the extent prescribed by the Committee
on the Date of Grant. Such restrictions may include without limitation
rights of repurchase or first refusal in the Corporation or provisions
subjecting the Restricted Shares to a continuing substantial risk of
forfeiture in the hands of any transferee.
(e) Any award or sale may be further conditioned upon the
attainment of Management Objectives to be established and, if
appropriate, adjusted by the Committee if, in the sole judgment of the
Committee, events or transactions have occurred after the Date of Grant
that are unrelated to the performance of the Participant and result in
distortion of the Management Objectives.
(f) Any award or sale may require that any or all dividends or
other distributions paid on the Restricted Shares during the period of
such restrictions be automatically sequestered and in the case of cash
dividends or other distributions, invested in an interest-bearing bank
account, which may be subject to the same restrictions as the
underlying award or such other restrictions as the Committee may
determine.
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(g) Each award or sale shall be evidenced by an agreement,
which shall be executed on behalf of the Corporation by any officer
thereof and delivered to and accepted by the Participant and shall
contain such terms and provisions as the Committee may determine
consistent with this Plan. Unless otherwise directed by the Committee,
all certificates representing Restricted Shares, together with a stock
power that shall be endorsed in blank by the Participant with respect
to such shares, shall be held in custody by the Corporation until all
restrictions thereon lapse.
(h) Common Shares representing, in the aggregate, not more
than seven percent (7%) of the Corporation's Total Committed Equity may
be issued or transferred as Restricted Shares awarded or sold pursuant
to this Section 5.
6. DEFERRED SHARES. The Committee may also authorize awards or sales of
Deferred Shares to Participants upon such terms and conditions as the Committee
may determine in accordance with the following provisions:
(a) Each award or sale shall constitute the agreement by the
Corporation to issue or transfer Common Shares to the Participant in
the future in consideration of the performance of services, subject to
the fulfillment during the Deferral Period of such conditions as the
Committee may specify, including the attainment of Management
Objectives to be established and, if appropriate, adjusted by the
Committee in accordance with the applicable provisions of Section 5 of
this Plan regarding Restricted Shares.
(b) Each award or sale may be made without additional
consideration from the Participant or in consideration of a payment by
the Participant that is less than the Market Value per Share on the
Date of Grant.
(c) Each award or sale shall provide that the Deferred Shares
covered thereby shall be subject to a Deferral Period, which shall be
fixed by the Committee on the Date of Grant, and any award or sale may
provide for the earlier termination of such period in the event of a
change in control of the Corporation or other similar transaction or
event.
(d) During the Deferral Period, the Participant shall not have
any right to transfer any rights under the subject award, shall not
have any rights of ownership in the Deferred Shares and shall not have
any right to vote such shares.
(e) Each award or sale shall be evidenced by an agreement,
which shall be executed on behalf of the Corporation by any officer
thereof and delivered to and accepted by the Participant and shall
contain such terms and provisions as the Committee may determine
consistent with this Plan.
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(f) Common Shares representing, in the aggregate, not more
than one percent (it) of the Corporation's Total Committed Equity may
be issued or transferred as Deferred Shares awarded or sold pursuant to
this Section 6.
7. AUTOMATIC GRANTS OF NONQUALIFIED STOCK OPTIONS TO NONEMPLOYEE
DIRECTORS. Option Rights shall be automatically granted to Nonemployee Directors
as follows:
(a) On the Effective Date of this Plan, an option to purchase
Common Shares representing 0.1875% of the Corporation's Total Committed
Equity shall be granted to each person who is a Nonemployee Director of
the Corporation on that date.
(b) Each person (a "Successor Director") who first becomes a
Nonemployee Director after the Effective Date of this Plan shall be
granted an option to purchase Common Shares representing 0.1875% of the
Corporation's Total Committed Equity. Such option shall be granted and
be effective on the date the Successor Director first becomes a
Nonemployee Director. Notwithstanding the foregoing, during the term of
this Plan if the number of Common Shares available to grant to a
Successor Director under the Plan on a scheduled date of grant is
insufficient to make all automatic grants required to be made pursuant
to the Plan on such date, then each Successor Director shall receive an
option to purchase Common Shares equal, in the aggregate, to a pro rata
number of the remaining Common Shares available under this Section 7;
provided, however, that if such proration results in fractional Common
Shares, then such option to purchase Common Shares shall be rounded
down to the nearest whole number of Common Shares.
(c) Each grant made pursuant to Section 7(a) shall be
evidenced by a Nonqualified Stock Option Agreement which contains the
terms and provisions of Exhibit A hereto. Each grant made pursuant to
Section 7(b) shall be evidenced by a Nonqualified Stock Option
Agreement which contains the terms and provisions of Exhibit A hereto
except that the Option Price per Common Share shall equal the Market
Value per Share on the Date of Grant.
(d) Common Shares representing, in the aggregate, not more
than two and one-quarter percent (2-1/4%) of the Corporation's Total
Committed Equity may be issued or transferred upon the exercise of
Option Rights granted pursuant to this Section 7.
(e) On the day immediately following the date of each Annual
Meeting of the Corporation's shareholders, an option to purchase two
thousand (2,000) Common Shares shall be granted to each person who is
an "eligible" Nonemployee Director on that date. For purposes of the
preceding sentence, a Nonemployee Director shall become "eligible" when
the person has continuously served as a Nonemployee Director for a
period of at least ten (10) months. Each grant made pursuant to this
Section 7(e) shall be evidenced by a Nonqualified Stock Option
Agreement which, in all material respects, shall be as set forth in
Schedule "I" hereto.
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8. TRANSFERABILITY. (a) No Option Right or other derivative security (as that
term is used in Rule 16b-3) granted or awarded under this Plan shall be
transferable by a Participant other than by will or the laws of descent and
distribution. Option Rights shall be exercisable during a Participant's lifetime
only by the Participant or, in the event of the Participant's legal incapacity,
by his guardian or legal representative acting in a fiduciary capacity on behalf
of the Participant under state law and court supervision.
(b) Any grant or award made under this Plan may provide that
all or any part of the Common Shares that are (i) to be issued or
transferred by the Corporation upon the exercise of Option Rights, upon
the termination of the Deferral Period applicable to Deferred Shares,
or (ii) no longer subject to the substantial risk of forfeiture and
restrictions on transfer referred to in Section 5 of this Plan, shall
be subject to further restrictions upon transfer.
9. ADJUSTMENTS. The Committee may make or provide for such adjustments
in the (a) number of Common Shares covered by outstanding Option Rights and
Deferred Shares granted hereunder, (b) prices per share applicable to such
Option Rights, and (c) kind of shares covered thereby, as the Committee in its
sole discretion may in good faith determine to be equitably required in order to
prevent dilution or enlargement of the rights of Participants that otherwise
would result from (x) any stock dividend, stock split, combination of shares,
recapitalization or other change in the capital structure of the Corporation,
(y) any merger, consolidation, spin-off, spin-out, split-off, split-up,
reorganization, partial or complete liquidation or other distribution of assets,
issuance of rights or warrants to purchase securities or (z) any other corporate
transaction or event having an effect similar to any of the foregoing. In the
event of any such transaction or event, the Committee may provide in
substitution for any or all outstanding grants or awards under this Plan such
alternative consideration as it may in good faith determine to be equitable
under the circumstances and may require in connection therewith the surrender of
all awards so replaced. The Committee may also make or provide for such
adjustments in the number of shares specified in Section 3 of this Plan and in
the number of shares under options to be granted automatically pursuant to
Section 7 of this Plan as the Committee in its sole discretion may in good faith
determine to be appropriate in order to reflect any transaction or event
described in this Section 9.
10. FRACTIONAL SHARES. The Corporation shall not be required to issue
any fractional Common Shares pursuant to this Plan. The Committee may provide
for the elimination of fractions or for the settlement thereof in cash.
11. WITHHOLDING TAXES. To the extent that the Corporation is required
to withhold federal, state, local or foreign taxes in connection with any
payment made or benefit realized by a Participant or other person under this
Plan, and the amounts available to the Corporation for such withholding are
insufficient, it shall be a condition to the receipt of such payment or the
realization of such benefit that the Participant or such other person make
arrangements satisfactory to the Corporation for payment of the balance of such
taxes required to be withheld. At the discretion of the Committee, such
arrangements may include relinquishment of a portion of such benefit. The
Corporation and any Participant or such other person may also make similar
arrangements with respect to the payment of any taxes with respect to which
withholding is not required.
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12. CERTAIN TERMINATIONS OF EMPLOYMENT, HARDSHIP AND APPROVED LEAVES OF
ABSENCE. Notwithstanding any other provision of this Plan to the contrary, in
the event of termination of employment by reason of death, disability, normal
retirement, early retirement with the consent of the Corporation or leave of
absence approved by the Corporation, or in the event of hardship or other
special circumstances, of a Participant who holds an Option Right that is not
immediately and fully exercisable, any Restricted Shares as to which the
substantial risk of forfeiture or the prohibition or restriction on transfer has
not lapsed, any Deferred Shares as to which the Deferral Period is not complete,
or any Common Shares that are subject to any transfer restriction pursuant to
Section 8(b) of this Plan, the Committee may in its sole discretion take any
action that it deems to be equitable under the circumstances or in the best
interests of the Corporation, including without limitation waiving or modifying
any limitation or requirement with respect to any award under this Plan.
13. ADMINISTRATION OF THE PLAN. (a) This Plan shall be administered by
a committee composed of three or more members of the Board, each of
whom shall be a "disinterested person" within the meaning of Rule
16b-3. A majority of the Committee shall constitute a quorum, and the
acts of the members of the Committee who are present at any meeting
thereof at which a quorum is present, or acts unanimously approved by
the members of the Committee in writing, shall be the acts of the
Committee.
(b) The interpretation and construction by the Committee of
any provision of this Plan or of any agreement, notification or
document evidencing the grant or award of Option Rights, Restricted
Shares or Deferred Shares, and any determination by the Committee
pursuant to any provision of this Plan or any such agreement,
notification or document, shall be final and conclusive. No member of
the Committee shall be liable for any such action taken or
determination made in good faith.
(c) Anything herein to the contrary notwithstanding, grants or
awards of Option Rights, Restricted Shares or Deferred Shares, and
other related actions or determinations, approved by the United States
Bankruptcy Court for the Southern District of Ohio, Eastern Division,
in connection with its approval of the Corporation's Plan of
Reorganization shall be deemed to have been effected hereunder by the
Committee.
14. AMENDMENTS AND OTHER MATTERS. (a) This Plan may be amended from
time to time by the Committee, but no such amendment (except as
expressly authorized by this Plan) shall increase the maximum number of
shares specified in Section 3 of this Plan, change the provisions of
Section 7 of this Plan that specify the number of Common Shares under
options to be granted automatically to Nonemployee Directors or that
specify the Option Price or timing of such grants, or cause Rule 16b-3
to become inapplicable to this Plan, without the further approval of
the shareholders of the Corporation. In no event shall the provisions
of Section 7 of this Plan be amended more than once every six (6)
months except to comport with changes in the Code or the regulations
thereunder.
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(b) With the concurrence of the affected Optionee, the
Committee may cancel any agreement evidencing Option Rights or any
other grant or award granted under this Plan. In the event of such
cancellation, the Committee may authorize the granting or awarding of
new Option Rights or other grants or awards hereunder, which may or may
not cover the same number of Common Shares that had been the subject of
the prior grant or award, in such manner, at such Option Price and
subject to such other terms, conditions and discretions as would have
been applicable under this Plan had the cancelled Option Rights or
other grant or award not been granted.
(c) This Plan shall not confer upon any Participant or
Nonemployee Director any right with respect to continuance of
employment or other service with the Corporation or any Subsidiary and
shall not interfere in any way with any right that the Corporation or
any Subsidiary would otherwise have to terminate any Participant's or
Nonemployee Director's employment or other service at any time.
(d)(i) To the extent that any provision of this Plan would
prevent any Option Right that was intended to qualify under particular
provisions of the Code from so qualifying, such provision of this Plan
shall be null and void with respect to such Option Right; provided,
however, that such provision shall remain in effect with respect to
other Option Rights, and there shall be no further effect on any
provision of this Plan.
(ii) Any grant or award that may be made pursuant to an
amendment to this Plan that shall have been adopted without the
approval of the shareholders of the Corporation shall be null and void
if it is subsequently determined that such approval was required in
order for Rule 16b-3 to remain applicable to this Plan.
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CARDINAL REALTY SERVICES, INC.
NON-EMPLOYEE DIRECTOR RESTRICTED STOCK PLAN
1. PURPOSE. The purpose of this Non-Employee Director Restricted Stock
Plan (this "Plan") is to enable Cardinal Realty Services, Inc. ("Cardinal") to
attract and retain qualified non-employee directors and to provide these
non-employee directors an opportunity to increase their ownership interest of
shares of Cardinal common stock, no par value, of Cardinal ("Common Stock").
Cardinal believes that the ownership of shares of Common Stock by non-employee
directors will serve to align the interests of non-employee directors with
Cardinal's other shareholders.
2. SHARES SUBJECT TO THIS PLAN. The aggregate number of shares of
Common Stock reserved and available for issuance under this Plan shall not
exceed 50,000 shares. Shares of Common Stock issued by Cardinal under this Plan
may be authorized and unissued shares or shares purchased on the open market or
in private transactions. If the number of outstanding shares of Common Stock of
Cardinal is changed by reason of split-ups or combinations of shares or
recapitalization or by reason of stock dividends, the number of shares reserved
and available for issuance under this Plan will be appropriately adjusted as
determined by Cardinal's Board of Directors (the "Board") or the Board's
Compensation Committee so as to reflect such change.
3. ELIGIBILITY. Each director of Cardinal is eligible to participate in
this Plan unless such director is an employee of Cardinal or any of its
affiliates or subsidiaries. Non-employee directors participating in this Plan
are referred to herein as "Participants."
4. PARTICIPATION. Each eligible non-employee director may elect to
participate in this Plan by authorizing and instructing Cardinal to reduce all
or any portion of the cash compensation otherwise payable for services to be
rendered by him as a director (including, without limitation, the annual
retainer and any fees payable for attending meetings of the Board or any
committee of the Board) (collectively, "Director Compensation") and to receive
in lieu thereof restricted shares of Common Stock ("Restricted Stock"). Any such
election shall be made by executing and delivering to Cardinal prior to the
commencement of the fiscal year as to which such election shall become
effective, an election form authorizing and instructing Cardinal to issue
Restricted Stock in lieu of all or any portion of the Director Compensation that
the non-employee director is entitled to receive at the end of each fiscal
quarter; provided that with respect to the third and fourth quarters of
Cardinal's 1996 fiscal year eligible non-employee directors may elect to
participate in the Plan by executing and delivering to Cardinal an election form
prior to June 15, 1996. Participants may elect deductions as a percentage of
Director Compensation payable to the Participant at the end of each fiscal
quarter (such percentages to be 25%, 50%, 75% or 100%).
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Restricted Stock issued under this Plan will have a restriction period
of three (3) years. Notwithstanding any other provision of this Plan, Restricted
Stock will be subject to the following terms and conditions:
(a) Prior to the issuance of shares of Restricted Stock, the
Participant will be required to deliver to Cardinal a stock power
signed by the Participant in form and substance satisfactory to
Cardinal. Restricted Stock will be represented by a stock certificate
registered in the name of the holder. The certificate for the
Restricted Stock, together with the executed stock power, will be held
by Cardinal in its control for the account of the Participant until the
restrictions set forth in this Paragraph 4 lapse (at which time the
certificate for the Restricted Stock will be delivered to the
Participant) or, if earlier, until the Restricted Stock is forfeited to
Cardinal and cancelled as set forth in this Paragraph 4. The holder
will have the right to enjoy all shareholder rights during the
restriction period (including the right to vote the shares of
Restricted Stock and the right to receive any cash dividends thereon)
with the exception that:
(i) The holder may not sell, exchange, transfer,
pledge, hypothecate, assign or otherwise dispose of the
Restricted Stock during the restriction period, except by
bequest pursuant to a will or by intestacy; and
(ii) A breach of the terms and conditions during the
restriction period will cause a forfeiture of the Restricted
Stock to Cardinal without notice and without consideration.
(b) All restrictions will lapse and the holder of the
Restricted Stock will be entitled to the delivery of a stock
certificate or certificates upon the earliest of the following:
(i) Three (3) years from the date the applicable
shares of Restricted Stock are issued to the holder;
(ii) The date of the holder's death or disability;
(iii) The date the holder, after being nominated by
the Board, is not elected by the shareholders in an election
for the Board; or
(iv) The date on which the Board determines that the
holder will not be nominated for election to the Board.
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(c) Restricted Stock will be entirely forfeited to Cardinal
without notice and without consideration in the event that during a
restriction period the holder:
(i) Resigns (other than by reason of disability) or
is dismissed for cause from the Board during his election
term;
(ii) Declines to stand for an election to the Board
after having been nominated by the Board; or
(iii) Sells, exchanges, transfers, pledges,
hypothecates, assigns or otherwise disposes of the Restricted
Stock (or purports or attempts to do any of the foregoing),
except by bequest pursuant to a will or by intestacy.
To the extent shares of Restricted Stock are forfeited, any such shares
shall be retired, shall revert to the status of authorized but unissued shares
of Cardinal, and shall again be available for issuance under this Plan.
For purposes of subsection (b) above, "disability" will be deemed to
occur after one hundred twenty (120) days in the aggregate during any twelve
(12) month period, or after ninety (90) consecutive days, during which one
hundred twenty (120) or ninety (90) days, as the case may be, the holder of
Restricted Stock, by reason of his physical or mental disability or illness, has
been unable to discharge his duties as a member of the Board. For purposes of
subsection (c) above, a holder will be considered to have been dismissed for
cause if and only if he is dismissed on account of any act of fraud or
intentional misrepresentation, or embezzlement, misappropriation, or conversion
of assets or opportunities of Cardinal or any of its affiliates or subsidiaries.
5. CHANGE OR SUSPENSION OF DEDUCTION; TERMINATION OF PARTICIPATION.
Once made, elections are irrevocable and may not be changed or suspended so long
as the Participant is a non- employee director of Cardinal. Notwithstanding the
foregoing, if and when permitted under Rule 16b-3 of the General Rules and
Regulations of the Securities Exchange Act of 1934, as amended (whether pursuant
to Rule 16b-3 as adopted in 1991, or pursuant to the adoption of currently
proposed changes or other additional amendments to Rule 16b-3), then each
Participant shall be entitled to change or suspend his deduction for any fiscal
year by executing and delivering to Cardinal a new election form prior to the
commencement of that fiscal year. Participation in this Plan will terminate on
the date a Participant ceases to be eligible to participate in this Plan
pursuant to Paragraph 3 above.
6. NO INTEREST OR VOLUNTARY CONTRIBUTIONS. No interest will be paid on
deductions from Director Compensation. Participants may not make voluntary cash
contributions to this Plan.
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7. ISSUANCE OF SHARES. At the end of each fiscal quarter, each
Participant will automatically be issued the number of shares of Restricted
Stock determined by dividing (x) 125% of the Director Compensation that the
Participant has elected to receive Restricted Stock in lieu of by (y) the Fair
Market Value (as defined below) of the Common Stock. No fractional shares will
be issued. In lieu of fractional shares, Cardinal will pay to the Participant
cash in an amount equal to 80% of the Fair Market Value of any fractional share.
"Fair Market Value" means the average of the daily closing prices per
share of Common Stock for the thirty (30) consecutive trading day period ending
on the business day immediately preceding the date of the end of each fiscal
quarter (as adjusted for any stock dividend, split, combination or
reclassification that took effect during such thirty (30) business day period).
The closing price for each day shall be the last reported sales price regular
way or, in case no such reported sales take place on such day, the average of
the highest bid and the lowest asked prices regular way, in either case quoted
on the NASDAQ National Market System (the "NMS") or, if shares of Common Stock
are no longer traded on the NMS, any other public market on which shares of
Common Stock are traded, as reported in The Wall Street Journal.
8. ADMINISTRATION. This Plan will be administered by the Board's
Compensation Committee (the "Administrator"). The Administrator will maintain
the records of this Plan. The Administrator will have the sole right and
authority to interpret and construe the provisions of this Plan and the
Administrator's decision on disputes arising under this Plan will be binding and
conclusive on the Participants.
9. EFFECTIVE TIME. This Plan will become effective on the date of its
approval by the shareholders of Cardinal.
10. TERMINATION AND AMENDMENT OF THIS PLAN. This Plan may be amended or
terminated by the Board at any time, but no amendment without the approval of
the shareholders of Cardinal will be made to the extent shareholder approval
would be required under Rule 16b-3 of the General Rules and Regulations of the
Securities Exchange Act of 1934, as amended. No amendment of this Plan may,
without the consent of the holder of Restricted Stock, adversely affect his
rights thereunder. In addition, the provisions of this Plan may not be amended
more than once every six (6) months other than to comport with changes in the
Internal Revenue Code of 1986, as amended, the Employee Retirement Income
Security Act of 1974, as amended, or the rules thereunder. This Plan will
continue until it is terminated by the Board.
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11. ASSIGNMENT AND ALIENATION. No interest under this Plan will be
subject in any manner to anticipation, alienation, sale, transfer, assignment or
pledge, either voluntary or involuntary, and any attempt to do so will be null
and void, except as provided under applicable law. No interest under this Plan
will be liable for, or subject to, the debts, contracts, liabilities,
engagements or torts of any person possessing such interest, except as provided
under law.
12. RESPONSIBILITY. Neither Cardinal, the Administrator, nor any
director, officer, employee or agent of any of them, will have any
responsibility or liability for any act or thing done or left undone, any
mistake of judgment, or for any omission or wrongful act unless resulting from
its own gross negligence, willful misconduct or intentional misfeasance,
including, without limiting the generality of the foregoing, any action taken
with respect to deductions made from Participants and with respect to the price,
time, quantity or other conditions and circumstances of the issuance of the
shares of Common Stock under the terms of this Plan.
13. COMPLIANCE. Delivery of certificates for Restricted Stock may be
postponed by Cardinal for such period as may be required for Cardinal to comply
with any applicable requirements of any federal, state or local law or
regulation or any administrative or quasi-administrative requirement applicable
to the sale, issuance, distribution or delivery of such Restricted Stock.
Cardinal may, in its sole discretion, require Participants to furnish Cardinal
with appropriate representations and a written investment letter prior to the
delivery of any Restricted Stock pursuant to this Plan.
14. APPLICABLE LAW. The provisions of this Plan will be governed and
construed in accordance with the laws of State of Ohio.
15. GENDER. When necessary or appropriate to the meaning hereof, the
singular, plural, masculine, feminine and neuter will be deemed to include each
other.
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CARDINAL REALTY SERVICES, INC.
EXECUTIVE DEFERRED COMPENSATION PLAN
ARTICLE I
PURPOSE
The purpose of this Plan is to provide certain key employees with a
deferred compensation benefit measured by the bookkeeping accounts established
and maintained hereunder.
ARTICLE II
DEFINITIONS
2.1 "Allocation Date" means each day as of which investment earnings or
losses are allocated pursuant to the terms of the Trust.
2.2 "Beneficiary" means the executor or administrator of the estate of
the deceased Participant.
2.3 "Benefit Amount" means the account balance of the Participant's
Participant Account, determined at the time of distribution.
2.4 "Board" means the Board of Directors of the Company.
2.5 "Bonus Stock" means the shares of Company Stock that would
otherwise be payable to a Participant as a bonus pursuant to the terms of the
Participant's employment agreement with the Company or otherwise in accordance
with the Company's incentive compensation plan in effect from time to time.
2.6 "Closing Price" means the closing price of the Company Stock on the
Nasdaq National Market System, or if the Company Stock is not listed or admitted
in such system, the principal securities exchange on which the Company Stock is
listed or admitted to trading, on the last trading day preceding the Payment
Event.
2.7 "Committee" means The Compensation Committee of the Board.
2.8 "Company" means Cardinal Realty Services, Inc., an Ohio
corporation.
2.9 "Company Stock" means shares of the Company's common stock.
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2.10 "Effective Date" means April 18, 1996, the date as of which this
Plan has been approved by the Board.
2.11 "Election Date" means the applicable election deadline established
pursuant to Section 4.3.
2.12 "Election Form" means the form completed by a Participant and
submitted to the Company reflecting the Participant's deferral election pursuant
to Section 4.2.
2.13 "Elective Deferral Credits" means the amount credited to a
Participant Account from time to time pursuant to Section 4.2.
2.14 "Investment Credits" means the amount added to or subtracted from
a Participant Account from time to time pursuant to Section 4.4.
2.15 "Market Capitalization Restricted Stock" means the shares of
restricted Company Stock that: (a) would otherwise be provided to the
Participant under the Participant's employment agreement with the Company; and
(b) vests based upon "Market Capitalization" as defined therein.
2.16 "Matching Stock" means the shares of Company Stock that would
otherwise be payable to a Participant as a match to the Participant's purchase
of Company Stock, as determined pursuant to the terms of the Participant's
employment agreement with the Company.
2.17 "Other Restricted Stock" means the shares of restricted Company
Stock that would otherwise be provided to the Participant under the
Participant's employment agreement with the Company, other than Market
Capitalization Restricted Stock.
2.18 "Participant" means each key employee of the Company who is
eligible to participate in this Plan pursuant to Article III and who makes an
election to participate pursuant to Section 4.2.
2.19 "Participant Account" means the bookkeeping account established
and maintained for a Participant pursuant to Section 4.1.
2.20 "Payment Event" means the first to occur of the payment events
described in clauses (a) through (c) of the first sentence of Section 7.1.
2.21 "Plan" means this Cardinal Realty Services, Inc. Executive
Deferred Compensation Plan.
2.22 "Trust" means the Cardinal Realty Services, Inc. Executive
Deferred Compensation Rabbi Trust Agreement.
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2.23 "Trustee" means The Provident Bank, a state chartered bank, or its
successor pursuant to the terms of the Trust.
ARTICLE III
ELIGIBILITY TO PARTICIPATE
3.1 Eligibility. As of the Effective Date, each of Company's key
executives listed on Exhibit A shall be eligible to participate in this Plan.
Thereafter, the Committee, in its sole discretion, may name additional key
employees as eligible for participation.
3.2 Cessation of Participation. The Committee may terminate the
participation of any Participant if the Committee, in its sole discretion,
determines that: (a) such person is no longer a member of "a select group of
management or highly compensated employees" of the Company, within the meaning
of the Employee Retirement Income Security Act of 1974, as amended; or (b) this
Plan or the related Trust results in Federal income tax consequences different
from those anticipated by the Company. A Participant who has terminated
employment with the Company shall cease to be a Participant at the time the
Benefit Amount is paid to the Participant or the Participant's Beneficiary. If
this Plan is terminated pursuant to Section 8.2, a Participant shall cease to be
a Participant at the time the Benefit Amount is paid to the Participant or the
Participant's Beneficiary.
ARTICLE IV
PARTICIPATION AND ACCOUNT CREDITS
4.1 Establishment of Accounts. A Participant Account shall be
established and maintained for each Participant. Each Participant Account shall
be a bookkeeping account reflecting the Elective Deferral Credits and Investment
Credits allocable with respect to a Participant pursuant to this Article. The
balance of each Participant Account as of the last day of each calendar year
shall be communicated in writing to the Participant on or before March 31 of the
following year or on a more frequent basis as may be determined by the
Committee.
4.2 Elective Deferral Credits. A Participant may elect to defer the
receipt of any or all of his or her Bonus Stock, Matching Stock, Market
Capitalization Restricted Stock or Other Restricted Stock to be paid by the
Company by so indicating on the Election Form. In order to be effective, a
Participant's completed Election Form must be submitted to the Company prior to
the applicable Election Date and must relate only to Company Stock to be paid
after the Election Date. A Participant's election hereunder shall become
irrevocable on the applicable Election Date. A Participant's election hereunder
as to Bonus Stock shall remain in effect indefinitely, unless modified by a
subsequent election made in accordance with the foregoing. All amounts deferred
by a Participant hereunder shall be credited to the Participant's Participant
Account as Elective Deferral
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Credits on, or as soon as is reasonably practicable after, the date the Company
Stock would otherwise be paid to the Participant.
4.3 Deadline for Making Elections. The Election Date applicable to a
Participant's Market Capitalization Restricted Stock and Other Restricted Stock
shall be the day such shares are granted. The Election Date applicable to a
Participant's Matching Stock shall be the day prior to the date the Participant
purchases the shares of Company Stock used as the basis for payment of the
Matching Stock. The Election Date applicable to a Participant's Bonus Stock for
a given fiscal year of the Company shall be the last day of the third quarter of
such fiscal year.
4.4 Investment Credits. As of each Allocation Date, each Participant
Account shall be adjusted, positively or negatively, to reflect the deemed
investment performance of the Participant Account since the preceding Allocation
Date. Such investment performance shall be measured by the actual performance of
the Trust investments made with respect to the Participant Account as described
in Article V.
ARTICLE V
INVESTMENT
This Article V describes the general investment mechanics under the
Trust which defines the actual measure of the value of each Participant Account.
Each Participant Account shall be deemed invested in the shares of Company Stock
that would otherwise be paid to the Participant in the absence of an election
under Section 4.2. For such purposes, the number of shares credited as the
deemed investment shall be the gross number of shares payable as Company Stock
without reduction for any income taxes or income tax withholding that would
otherwise apply. Each Participant Account shall be credited with dividends as if
the account were actually invested in Company Stock. Further, all dividends
credited to a Participant Account shall be deemed reinvested in Company Stock,
to the extent practicable under the dividend reinvestment program established
pursuant to the terms of the Trust. Dividends not deemed reinvested under the
preceding sentence shall be credited and deemed invested in the manner
determined under the Trust. In the event that the Company substitutes the assets
of the Trust pursuant to Section 5(b) thereof, this Plan shall automatically
terminate.
ARTICLE VI
TRUST ACCUMULATION AND FUNDING STATUS
Subject to the other terms of this Plan and the terms of the Trust, the
Company shall make contributions to the Trust of an amount equal to the amount
of the aggregate Elective Deferral Credits for the relevant period. Such
contributions shall be made at the time such Credits are credited to the
respective Participant Accounts, or as soon as is reasonably practicable
thereafter. By electing
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to participate hereunder, each Participant accepts the terms of this Plan and
the Trust. Nothing contained in this Plan or the Trust shall vest in any
Participant or any Beneficiary any right, title or interest in or to any assets
of the Trust and the assets of the Trust shall at all times remain subject to
the claims of the Company's general creditors. As such, the obligations of the
Trustee and the Company hereunder are not funded or secured in any way that
gives Participant or a Beneficiary any rights greater than that of a general
creditor of the Company.
ARTICLE VII
PAYMENT OF BENEFITS
7.1 Benefit Amount. A Participant's Benefit Amount, to the extent
vested under Section 7.2, shall be paid to the Participant within Ten (10) days
after the earliest to occur of the following: (a) the date of the Participant's
termination of employment with the Company; (b) the date the Plan is terminated
pursuant to Section 8.2; and (c) the date as of which the Board determines that
the participation of the Participant shall terminate pursuant to clause (b) of
the first sentence of Section 3.2. If the Company is notified of a Participant's
death prior to payment of the vested Benefit Amount, such payment shall be made
to the Participant's Beneficiary. Payment of a Participant's vested Benefit
Amount shall be made by the Trustee from the Trust fund, to the extent the
account can and is used to make such payment. If the account maintained by the
Trustee for the Participant is not used to pay a Participant's full vested
Benefit Amount, the Company shall make the balance of such payment hereunder. A
Participant's vested Benefit Amount shall be paid in a single payment in the
form of Company Stock; provided, however, that: (a) any amount representing a
fractional interest in a share of Company Stock shall be paid in cash; and (b) a
Participant or Beneficiary may elect to have the full vested Benefit Amount paid
in cash, net of any and all expenses incurred to effect such cash distribution.
A Participant's or Beneficiary's election to receive a cash distribution shall
not be effective unless made in writing and submitted to the Committee no more
than five (5) days after the Payment Event. The amount of any cash distribution
hereunder shall be determined using the Closing Price as the measure of the
value of the Common Stock. Notwithstanding the foregoing provisions of this
Section 7.1, the form and timing of distribution of a Participant's interest
under this Plan shall at all times be subject to all restrictions and
limitations imposed by applicable state and federal securities laws and
regulations.
7.2 Vesting. The portion of a Participant's Benefit Amount attributable
to Bonus Stock or Matching Stock shall be fully vested at all times. The portion
of a Participant's Benefit Amount attributable to Market Capitalization
Restricted Stock or Other Restricted Stock shall vest in the manner determined
under the Participant's employment agreement with the Company.
7.3 Taxes and Withholding. If a Participant (or Beneficiary) becomes
entitled to receive cash or recognizes other taxable income under this Plan, the
Company shall have the right to withhold taxes from the Participant's (or
Beneficiary's) payment hereunder or may deduct such taxes from any other amounts
payable to the Participant (or Beneficiary) at any time thereafter in cash or
otherwise. In the event all cash payments due a Participant (or Beneficiary) are
insufficient to provide the
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required amount of withholding taxes, the Participant (or Beneficiary) shall be
required to pay to the Company the amount of required withholding in excess of
all cash payments due. The Company shall bear no responsibility whatsoever for
the taxes or tax effects resulting under this Plan or the Trust as to any
Participant or Beneficiary.
ARTICLE VIII
AMENDMENT AND TERMINATION
8.1 Amendment. The Board, in its sole discretion, may amend this Plan
at any time; provided, however, that any amendment that could adversely affect a
Participant's rights and interests hereunder (excluding the right to make future
deferrals) will be effective as to such Participant only if the Participant
consents in writing to the amendment.
8.2 Termination. The Board, in its sole discretion, may terminate this
Plan at any time. In addition, this Plan shall automatically terminate as
described in Article V.
ARTICLE IX
MISCELLANEOUS
9.1 Claims Procedure.
(a) Claim. A Participant or other person who believes that he
or she is being denied a claim to which he is entitled (hereinafter
referred to as "Claimant") may file a written request for such benefit
with the Company setting forth the claim. Upon receipt of a claim, the
Company shall advise the Claimant that a reply will be forthcoming
within Thirty (30) days and shall, in fact, deliver such reply within
such period. However, the Company may extend the reply period for an
additional Fifteen (15) days for reasonable cause. If the claim is
denied in whole or in part, the Company will adopt a written statement
using language calculated to be understood by the Claimant setting
forth:
(i) the specific reason or reasons for denial;
(ii) the specific references to pertinent Plan
provisions on which the denial is based;
(iii) a description of any additional material or
information necessary for the Claimant to perfect the claim
and an explanation why such material or such information is
necessary;
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(iv) appropriate information as to the steps to be
taken if the Claimant wishes to submit the claim for review;
and
(v) the time limits for review under Subsection (b),
below.
(b) Review. Within Sixty (60) days after the receipt by the
Claimant of the written statement described above, the Claimant may
request in writing that the Board review the previous determination.
The Claimant or his duly authorized representative may, but need not,
review the pertinent documents and submit issues and comments in
writing for consideration by the Board. Within Thirty (30) days after
the Board's receipt of a request for review, it will review the
previous determination. After considering all materials presented by
the Claimant, the Board will render a written statement, written in a
manner calculated to be understood by the Claimant setting forth the
specific reasons for the decision and containing specific references to
the pertinent Plan provisions on which the decision is based. If
special circumstances require that the Thirty (30) day time period be
extended, the Board will so notify the Claimant and will render the
decision as soon as possible but not later than Sixty (60) days after
receipt of the request for review.
9.2 No Beneficial Interest. No person or entity shall acquire any
beneficial interest in an amount under this Plan prior to the date on which the
amount becomes payable.
9.3 Spendthrift Clause. No amount provided under this Plan shall be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge, either voluntary or involuntary, and any attempt
to so alienate, anticipate, sell, transfer, assign, pledge, encumber or charge
the same shall be null and void. No such amount shall be liable for or subject
to the debts, contracts, liabilities, engagements or torts of any person to whom
such amount is or may be payable, except as required under applicable law.
9.4 Employment Contract and Other Arrangements. The adoption and
maintenance of this Plan shall neither be deemed to nor shall it be an
employment agreement between Company and the Participant.
9.5 Titles and Headings. The titles or headings of the Articles and
Sections hereof are included solely for convenience and reference and, in the
event of any conflict between such titles or headings and the text, the text
shall control.
9.6 Parties to Agreement. This Plan shall be binding upon and shall
operate for the benefit of the Company, its successors and assigns, and the
Participant and his or her heirs, estate and personal representatives.
9.7 Governing Law. This Plan shall be governed and construed in
accordance with the laws of the State of Ohio, without giving effect to the
principles of conflicts of laws thereof, but subject to preemption of Federal
law.
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9.8 Gender. Where necessary or appropriate to the meaning hereof, the
singular, plural, masculine, feminine and neuter shall be deemed to include each
other.
9.9 Interpretation of Agreement. The Committee shall have full
authority, in its sole discretion, to interpret this Plan and to determine any
and all matters whatsoever relating to the administration of this Plan.
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EXHIBIT A
PARTICIPANTS
John Bram Bartling, Jr.
Mark D. Thompson
Paul R. Selid
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82
CARDINAL REALTY SERVICES, INC.
EXECUTIVE DEFERRED COMPENSATION
RABBI TRUST AGREEMENT
(a) This Agreement made this 27th day of November, 1996, by and between
Cardinal Realty Services, Inc. (Company) and The Provident Bank, a state
chartered bank (Trustee);
(b) WHEREAS, Company has adopted the Cardinal Realty Services, Inc.
Executive Deferred Compensation Plan.
(c) WHEREAS, Company wishes to establish a trust (hereinafter called
"Trust") and to contribute to the Trust assets that shall be held therein,
subject to the claims of Company's creditors in the event of Company's
Insolvency, as herein defined, until paid to Plan participants and their
beneficiaries in such manner and at such times as specified in the Plan;
(d) WHEREAS, it is the intention of the parties that this Trust shall
constitute an unfunded arrangement and shall not affect the status of the Plan
as an unfunded plan maintained for the purpose of providing deferred
compensation for a select group of management or highly compensated employees
for purposes of Title I of the Employee Retirement Income Security Act of 1974;
(e) WHEREAS, it is the intention of Company to make contributions to
the Trust to provide itself with a source of funds to assist it in the meeting
of its liabilities under the Plan;
NOW, THEREFORE, the parties do hereby establish the Trust and agree
that the Trust shall be comprised, held and disposed of as follows:
SECTION 1. ESTABLISHMENT OF TRUST
(a) Company hereby deposits with Trustee in trust the sum of Ten
Dollars ($10.00), which shall become the principal of the Trust to be held,
administered and disposed of by Trustee as provided in this Trust Agreement.
(b) The Trust hereby established shall be irrevocable.
(c) The Trust is intended to be a grantor trust, of which Company is
the grantor, within the meaning of subpart E, part I, subchapter J, chapter 1,
subtitle A of the Internal Revenue Code of 1986, as amended, and shall be
construed accordingly.
(d) The principal of the Trust, and any earnings thereon shall be held
separate and apart from other funds of Company and shall be used exclusively for
the uses and purposes of Plan participants and general creditors as herein set
forth. Plan participants and their beneficiaries shall have no preferred claim
on, or any beneficial ownership interest in, any assets of the Trust. Any
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rights created under the Plan and this Trust Agreement shall be mere unsecured
contractual rights of Plan participants and their beneficiaries against Company.
Any assets held by the Trust will be subject to the claims of Company's general
creditors under federal and state law in the event of Insolvency, as defined in
Section 3(a) herein.
(e) As required under the terms of the Plan, Company shall be required
to irrevocably deposit additional cash or other property to the Trust in an
amount sufficient to pay each Plan participant or beneficiary the benefits
payable pursuant to the terms of the Plan as of the close of the Plan year(s).
SECTION 2. PAYMENTS TO PLAN PARTICIPANTS AND THEIR BENEFICIARIES.
(a) Company shall deliver to Trustee a schedule (the "Payment
Schedule") that indicates the amounts payable in respect of each Plan
participant (and his or her beneficiaries), that provides a formula or other
instructions acceptable to Trustee for determining the amounts so payable, the
form in which such amount is to be paid (as provided for or available under the
Plan), and the time of commencement for payment of such amounts. Except as
otherwise provided herein, Trustee shall make payments to the Plan participants
and their beneficiaries in accordance with such Payment Schedule. The Trustee
shall make provision for the reporting and withholding of any federal, state or
local taxes that may be required to be withheld with respect to the payment of
benefits pursuant to the terms of the Plan and shall pay amounts withheld to the
appropriate taxing authorities or determine that such amounts have been
reported, withheld and paid by Company.
(b) The entitlement of a Plan participant or his or her beneficiaries
to benefits under the Plan shall be determined by Company or such party as it
shall designate under the Plan, and any claim for such benefits shall be
considered and reviewed under the procedures set out in the Plan.
(c) Company may make payment of benefits directly to Plan participants
or their beneficiaries as they become due under the terms of the Plan. Company
shall notify Trustee of its decision to make payment of benefits directly prior
to the time amounts are payable to participants or their beneficiaries. In
addition, if the principal of the Trust, and any earnings thereon, are not
sufficient to make payments of benefits in accordance with the terms of the
Plan, Company shall make the balance of each such payment as it falls due.
Trustee shall notify Company where principal and earnings are not sufficient.
SECTION 3. TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO TRUST
BENEFICIARY WHEN COMPANY IS INSOLVENT.
(a) Trustee shall cease payment of benefits to Plan participants and
their beneficiaries if the Company is Insolvent. Company shall be considered
"Insolvent" for purposes of this Trust Agreement if (i) Company is unable to pay
its debts as they become due, or (ii) Company is subject to a pending proceeding
as a debtor under the United States Bankruptcy Code.
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(b) At all times during the continuance of this Trust, as provided in
Section 1(d) hereof, the principal and income of the Trust shall be subject to
claims of general creditors of Company under federal and state law as set forth
below.
(1) The Board of Directors and the Chief Executive Officer of
Company shall have the duty to inform Trustee in writing of Company's
Insolvency. If a person claiming to be a creditor of Company alleges in
writing to Trustee that Company has become Insolvent, Trustee shall
determine whether Company is Insolvent and, pending such determination,
Trustee shall discontinue payment of benefits to Plan participants or
their beneficiaries.
(2) Unless Trustee has actual knowledge of Company's
Insolvency, or has received notice from Company or a person claiming to
be a creditor alleging that Company is Insolvent, Trustee shall have no
duty to inquire whether Company is Insolvent. Trustee may in all events
rely on such evidence concerning Company's solvency as may be furnished
to Trustee and that provides Trustee with a reasonable basis for making
a determination concerning Company's solvency.
(3) If at any time Trustee has determined that Company is
Insolvent, Trustee shall discontinue payments to Plan participants or
their beneficiaries and shall hold the assets of the Trust for the
benefit of Company's general creditors. Nothing in this Trust Agreement
shall in any way diminish any rights of Plan participants or their
beneficiaries to pursue their rights as general creditors of Company
with respect to benefits due under the Plan or otherwise.
(4) Trustee shall resume the payment of benefits to Plan
participants or their beneficiaries in accordance with Section 2 of
this Trust Agreement only after Trustee has determined that Company is
not Insolvent (or is no longer Insolvent).
(c) Provided that there are sufficient assets, if Trustee discontinues
the payment of benefits from the Trust pursuant to Section 3(b) hereof and
subsequently resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all payments due to Plan
participants or their beneficiaries under the terms of the Plan for the period
of such discontinuance, less the aggregate amount of any payments made to Plan
participants or their beneficiaries by Company in lieu of the payments provided
for hereunder during any such period of discontinuance.
SECTION 4. PAYMENTS TO COMPANY.
Except as provided in Section 3 hereof, after the Trust has become
irrevocable, Company shall have no right or power to direct Trustee to return to
Company or to divert to others any of the Trust assets before all payment of
benefits have been made to Plan participants and their beneficiaries pursuant to
the terms of the Plan.
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SECTION 5. INVESTMENT AUTHORITY.
(a) Except as required under clause (b) below, Trustee shall invest in
shares of Company common stock. Any cash received by Trustee, including amounts
received as dividends on Company common stock, shall be invested in such common
stock as soon as practicable after receipt. Any amounts held pending investment
into Company common stock shall be invested in an investment vehicle selected by
Trustee. Notwithstanding the foregoing provisions of this clause (a), Trustee
shall have no obligation or authority with respect to engaging in a transaction
in Company common stock that would violate any restriction or limitation imposed
by applicable state or federal securities laws and regulations. All rights
associated with assets of the Trust shall be exercised by Trustee or the person
designated by Trustee, and shall in no event be exercisable by or rest with Plan
participants.
(b) Notwithstanding the provisions of clause (a), above, Company shall
have the right at any time, and from time to time in its sole discretion, to
substitute assets of equal fair market value for any asset held by the Trust.
This right is exercisable by Company in a non-fiduciary capacity without the
approval or consent of any person in a fiduciary capacity.
(c) Trustee shall maintain bookkeeping accounts for each Plan
participant representing his or her interests under the Plan.
SECTION 6. DISPOSITION OF INCOME.
(a) During the term of this Trust, all income received by the Trust,
net of expenses and taxes, shall be accumulated and reinvested.
SECTION 7. ACCOUNTING BY TRUSTEE.
Trustee shall keep accurate and detailed records of all investments,
receipts, disbursements and all other transactions required to be made,
including such specific records as shall be agreed upon in writing between
Company and Trustee. Within Ninety (90) days following the close of each
calendar year and within Thirty (30) days after the removal or resignation of
Trustee, Trustee shall deliver to company a written account of its
administration of the Trust during such year or during the period from the close
of the last preceding year to the date of such removal or resignation, setting
forth all investments, receipts, disbursements and other transactions effected
by it, including a description of all securities and investments purchased and
sold with the cost or net proceeds of such purchases or sales (accrued interest
paid or receivable being shown separately), and showing all cash, securities and
other property held in the Trust at the end of such year or as of the date of
such removal or resignation, as the case may be.
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SECTION 8. RESPONSIBILITY OF TRUSTEE.
(a) Trustee shall act with the care, skill, prudence and diligence
under the circumstances then prevailing that a prudent person acting in like
capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims, provided, however, that
Trustee shall incur no liability to any person for any action taken pursuant to
a direction, request or approval given by Company which is contemplated by, and
in conformity with, the terms of the Plan or this Trust and is given in writing
by Company. In the event of a dispute between Company and a party, Trustee may
apply to a court of competent jurisdiction to resolve the dispute.
(b) If Trustee undertakes or defends any litigation arising in
connection with this Trust, Company agrees to indemnify Trustee against
Trustee's costs, expenses and liabilities (including, without limitation,
attorneys' fees and expenses) relating thereto and to be primarily liable for
such payments. If Company does not pay such costs, expenses and liabilities in a
reasonably timely manner, Trustee may obtain payment from the Trust.
(c) Trustee may consult with legal counsel (who may also be counsel for
Company generally) with respect to any of its duties or obligations hereunder.
(d) Trustee may hire agents, accountants, actuaries, investment
advisors, financial consultants or other professionals to assist it in
performing any of its duties or obligations hereunder.
(e) Trustee shall have, without exclusion, all powers conferred on
Trustees by applicable law, unless expressly provided otherwise herein,
provided, however, that if an insurance policy is held as an asset of the Trust,
Trustee shall have no power to name a beneficiary of the policy other than the
Trust, to assign the policy (as distinct from conversion of the policy to a
different form) other than to a successor Trustee, or to loan to any person the
proceeds of any borrowing against such policy.
(f) Notwithstanding any powers granted to Trustee pursuant to this
Trust Agreement or to applicable law, Trustee shall not have any power that
could give this Trust the objective of carrying on a business and dividing the
gains therefrom, within the meaning of section 301.7701-2 of the Procedure and
Administrative Regulations promulgated pursuant to the Internal Revenue Code.
SECTION 9. COMPENSATION AND EXPENSES OF TRUSTEE.
Company shall pay all administrative and Trustee's fees and expenses.
If not so paid, the fees and expenses shall be paid from the Trust.
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SECTION 10. RESIGNATION AND REMOVAL OF TRUSTEE.
(a) Trustee may resign at any time by written notice to Company, which
shall be effective Thirty (30) days after receipt of such notice unless Company
and Trustee agree otherwise.
(b) Trustee may be removed by Company on Thirty (30) days notice or
upon shorter notice accepted by Trustee.
(c) Upon resignation or removal of Trustee and appointment of a
successor Trustee, all assets shall subsequently be transferred to the successor
Trustee. The transfer shall be completed within Ten (10) days after receipt of
notice of resignation, removal or transfer, unless Company extends the time
limit.
(d) If Trustee resigns or is removed, a successor shall be appointed,
in accordance with Section 11 hereof, by the effective date of resignation or
removal under paragraph(s) (a) or (b) of this section. If no such appointment
has been made, Trustee may apply to a court of competent jurisdiction for
appointment of a successor or for instructions. All expenses of Trustee in
connection with the proceeding shall be allowed as administrative expenses of
the Trust.
SECTION 11. APPOINTMENT OF SUCCESSOR
(a) If Trustee resigns or is removed in accordance with Section 10(a)
or (b) hereof, Company may appoint any third party, such as a bank trust
department or other party that may be granted corporate trustee powers under
state law, as a successor to replace Trustee upon resignation or removal. The
appointment shall be effective when accepted in writing by the new Trustee, who
shall have all of the rights and powers of the former Trustee, including
ownership rights in the Trust assets. The former Trustee shall execute any
instrument necessary or reasonably requested by Company or the successor Trustee
to evidence the transfer.
(b) The successor Trustee need not examine the records and acts of any
prior Trustee and may retain or dispose of existing Trust assets, subject to
Sections 7 and 8 hereof. The successor Trustee shall not be responsible for and
Company shall indemnify and defend the successor Trustee from any claim or
liability resulting from any action or inaction of any prior Trustee or from any
other past event, or any condition existing at the time it becomes successor
Trustee.
SECTION 12. AMENDMENT OR TERMINATION.
(a) This Trust Agreement may be amended by a written instrument
executed by Trustee and Company. Notwithstanding the foregoing, no such
amendment shall conflict with the terms of the Plan or shall make the Trust
revocable after it has become irrevocable in accordance with Section 1(b)
hereof.
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(b) The Trust shall not terminate until the date on which Plan
participants and their beneficiaries are no longer entitled to benefits pursuant
to the terms of the Plan. Upon termination of the Trust, any assets remaining in
the Trust shall be returned to Company.
(c) Upon written approval of participants or beneficiaries entitled to
payment of benefits pursuant to the terms of the Plan, Company may terminate
this Trust prior to the time all benefit payments under the Plan have been made.
All assets in the Trust at termination shall be returned to Company.
SECTION 13. MISCELLANEOUS.
(a) Any provision of this Trust Agreement prohibited by law shall be
ineffective to the extent of any such prohibition, without invalidating the
remaining provisions hereof.
(b) Benefits payable to Plan participants and their beneficiaries under
this Trust Agreement may not be anticipated, assigned (either at law or in
equity), alienated, pledged, encumbered or subjected to attachment, garnishment,
levy, execution or other legal or equitable process.
(c) This Trust Agreement shall be governed by and construed in
accordance with the laws of Ohio.
SECTION 14. EFFECTIVE DATE.
The effective date of this Trust Agreement shall be November 27, 1997.
CARDINAL REALTY SERVICES, INC.
By: /s/ Mark D. Thompson
---------------------------------------
Mark D. Thompson
Executive Vice President
THE PROVIDENT BANK
By: /s/ Ernest S. Howard
----------------------------------------
Ernest S. Howard
Vice President
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AMENDMENT TO EMPLOYMENT AND AWARD AGREEMENTS
--------------------------------------------
This Amendment to Employment and Award Agreements (this "Amendment") is
entered into as of April 18, 1996 (so as to be effective: (i) in the case of the
Employment Agreement (as defined below) as of the 1st day of April, 1996; and
(ii) in the case of the Award Agreements (as defined below) as of April 15,
1996) by and between John Bram Bartling, Jr. ("Employee") and Cardinal Realty
Services, Inc., an Ohio corporation ("Employer").
RECITALS:
---------
A. Employee and Employer are parties to that certain Employment
Agreement dated as of December 1, 1995 (the "Employment Agreement").
B. Pursuant to the Employment Agreement, Employee has received certain
Restricted and Deferred Share Awards ("Share Awards") of Employer's common
stock, no par value (the "Common Stock") under Employer's Amended and Restated
1992 Incentive Equity Plan (the "Incentive Equity Plan"), as well as Employer's
agreement to issue or deliver "Matching Stock" to Employee, as follows:
1. Twenty-two thousand five hundred (22,500) shares of
Restricted Stock pursuant to Section 3(c)(i) of the Employment
Agreement and that certain Restricted Shares Agreement (Stock Award)
between Employer and Employee dated as of April 5, 1996;
2. Twenty thousand (20,000) shares of Restricted Stock
pursuant to Section 3(c)(ii) of the Employment Agreement and that
certain Restricted Shares Agreement between Employer and Employee dated
as of April 5, 1996; and
3. Employer's agreement (as set forth in Section 3(c) of the
Employment Agreement) to issue up to ten thousand (10,000) shares of
Common Stock to Employee on account of each share of Common Stock which
Employee purchases for his own account from January 1, 1996 through
December 31, 1996.
C. Employer has afforded Employee and certain other senior executive
officers of Employer with the opportunity to defer federal income taxes which
may otherwise be payable on account of the issuance or vesting of shares of the
Common Stock by establishing an Executive Deferred Compensation Plan dated April
18, 1996 (the "Deferred Compensation Plan") and by entering into that certain
Executive Deferred Compensation Rabbi Trust Agreement between Employer and The
Provident Bank, a state chartered bank, as Trustee (together with its
successors, "Trustee"), dated as of April 18, 1996 (the "Trust Agreement").
1
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90
D. Employee has heretofore taken steps to defer federal income taxes
otherwise payable in respect of the issuance or vesting of shares of the Common
Stock by executing that certain equity deferral election dated December 1, 1995
thereby electing to defer his actual receipt of the Common Stock pursuant to a
Deferred Compensation Arrangement and Rabbi Trust to be established by Employer.
E. Employer has now formally adopted the Deferred Compensation Plan and
entered into the Trust Agreement and, pursuant to Employee's prior election,
Employee and Employer desire to cause the Common Stock to be issued to and held
by the Trustee for his benefit in accordance with the Trust Agreement.
F. Employer and Employee desire to refine the provisions in the
Employment Agreement for Employee's Cash Bonus (as defined in the Employment
Agreement).
AMENDMENTS
1. Amendments to Award Agreements. Concurrently with the execution and
delivery of this Amendment, Employer and Employee will execute and deliver
Amended and Restated Award Agreements in the forms of Exhibits "A" and "B"
hereto. The Amended and Restated Award Agreements will provide that all
Restricted Shares will be issued to the Trustee for the benefit of Employee in
accordance with the provisions of the Deferred Compensation Plan and Trust
Agreement. The Award Agreements will also eliminate any references to the
Incentive Equity Plan inasmuch as the Common Stock formerly subject to the Share
Awards will not be issued under the Incentive Equity Plan.
2. Amendments to Employment Agreement. The Employment Agreement is
hereby amended as follows:
(a) The words "taxes, depreciation and amortization" are
hereby deleted from Section 3(b)(i) of the Employment Agreement and the
following words are hereby added to Section 3(b)(i) of the Employment
Agreement following the word "interest" as it appears in the second
line thereof: "(excluding, however, interest expense on account of
mortgage loans secured by real property in which the Company retains,
directly or indirectly, a one hundred percent (100%) equity ownership
interest), taxes, depreciation and amortization; with such earnings,
however, being further adjusted so as to exclude all non-recurring
items, including, without limitation, loan fees which the Company
receives from limited partnerships or other entities in which it
retains a minority interest and the accounts of which are not
consolidated in the Company's financial statements, net income from
disposal of non-core assets, restructuring costs and all other
extraordinary gains or losses; all as".
2
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91
(b) The words "shall issue to Employee" as they appear in
Section 3(c) of the Employment Agreement are hereby deleted and the
following language is substituted therefor: "shall issue to The
Provident Bank, a state chartered bank, in its capacity as Trustee
under that certain Executive Deferred Compensation Rabbi Trust
Agreement dated as of April 18, 1996 (the "Trust Agreement"), or any
successor trustee thereunder ("Trustee"), for the benefit of Employee".
(c) The second sentence of Section 3(c) of the Employment
Agreement is hereby deleted and the following sentence is substituted
therefor: "Any Matching Stock which Trustee is entitled to receive from
Employer shall be issued to Trustee within thirty (30) days of
Employee's purchase of any shares of Common Stock and shall be subject
to all restrictions and limitations imposed by applicable state and
federal securities laws and regulations."
(d) The following language is added to the end of Section
3(c)(i) of the Employment Agreement: "and except for the terms of
Employer's Executive Deferred Compensation Plan and the terms of the
Trust Agreement".
(e) The term "Employee" is hereby deleted from the second line
of Section 3(c)(ii) of the Employment Agreement, and the term "Trustee"
is substituted therefor.
3. Miscellaneous.
(a) Effect of Amendment. Except as specifically provided
herein, this Amendment does not in any way waive, amend, modify, affect
or impair the terms and conditions of the Employment Agreement, and all
terms and conditions of the Employment Agreement are to remain in full
force and effect unless otherwise specifically amended, waived or
changed pursuant hereto.
On and after the date of this Amendment, each reference in the
Employment Agreement to "this Agreement", "hereunder", "hereof",
"herein" or words of like import referring to the Employment Agreement
shall mean and be a reference to the Employment Agreement as amended by
this Amendment.
This Amendment constitutes the entire agreement among the
parties pertaining to the subject matter hereof and supersedes all
prior and contemporaneous agreements, understandings, representations
or other arrangements, whether express or implied, written or oral, of
the parties in connection therewith except to the extent expressly
incorporated or specifically referred to herein.
3
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92
(b) Counterparts. This Amendment may be executed in any number
of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute
but one and the same instrument.
(c) Governing Law. This Amendment shall be governed by, and
shall be construed and enforced in accordance with, the internal laws
of the State of Ohio, without regard to conflicts of laws principles.
IN WITNESS WHEREOF, Employer and Employee have signed this Amendment so
as to be effective as hereinabove provided.
CARDINAL REALTY SERVICES, INC.
Attest:
By: /s/ John Bram Bartling, Jr.
------------------------------
JOHN BRAM BARTLING, JR.
4
93
SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
----------------------------------------
This Second Amendment to Employment Agreement (this "Second Amendment")
is entered into as of December 20, 1996 by and between John Bram Bartling, Jr.
("Employee") and Cardinal Realty Services, Inc., an Ohio corporation
("Employer").
RECITALS:
---------
A. Employee and Employer are a party to that certain Employment
Agreement dated as of December 1, 1995, as amended by that certain Amendment to
Employment and Award Agreements dated as of April 18, 1996 (as so amended, the
"Employment Agreement").
B. Terms which are used but not otherwise defined in this Second
Amendment have the meanings given them in the Employment Agreement (including,
without limitation, terms defined in the Amendment to Employment and Award
Agreements). The Employer desires to extend the period during which Employee is
entitled to receive shares of Matching Stock from Employer pursuant to Section
3(c) of the Employment Agreement and, further, to allow Employee to elect to
receive payment of his Cash Bonus, if any, on account of Employer's 1996 fiscal
year in shares of Common Stock in lieu of cash with any such shares of Common
Stock received by Employee pursuant to such election qualifying as purchases of
Common Stock by Employee for purposes of Section 3(c) of the Employee Agreement.
NOW THEREFORE, Employer and Employee agree to amend the Employment
Agreement as provided in this Second Amendment:
1. Amendments to Employment Agreement.
(a) Section 3(c) of the Employment Agreement is hereby amended
by deleting the words "in 1996" in the first sentence and replacing it
with "from the date of this Agreement through and including April 30,
1997."
(b) Section 3(c) of the Employment Agreement is further
amended by deleting the words "in 1996" from the second sentence.
(c) Section 3(c) of the Employment Agreement is hereby further
amended by adding the following language to the end of said Section
3(c):
Notwithstanding the provisions of Section 3(b) of this
Agreement, in the event that Employee shall be entitled to the
payment of a Cash Bonus on account of Employer's 1996 fiscal
year, then, in such event, on or before April 30, 1997
Employee may furnish Employer with his written election to
receive shares of Common Stock having a fair market value
(such fair market value to be determined in the same manner as
shares of Common Stock issuable to the Trustee
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94
for the benefit of Employee on account of Employee's Stock
Bonus for Employer's 1996 fiscal year) in an amount specified
by Employee in such written election in lieu of such Cash
Bonus. Employee may make such an election only on account of
Employer's 1996 fiscal year. Any shares of Common Stock so
issued to the Trustee for the benefit of Employee on account
of such written election will, in turn, qualify under this
Section 3(c) as shares of Common Stock purchased by Employee
and, accordingly, the Trustee will be entitled to receive one
share of Matching Stock on account of each share of Common
Stock issued to Trustee for the benefit of Employee in lieu of
Employee's Cash Bonus in accordance with the provisions of
this Section 3(c).
2. Miscellaneous.
(a) Effect of Amendment. Except as specifically provided
herein, this Second Amendment does not in any way waive, amend, modify,
affect or impair the terms and conditions of the Employment Agreement,
and all terms and conditions of the Employment Agreement are to remain
in full force and effect unless otherwise specifically amended, waived
or changed pursuant hereto.
On and after the date of this Second Amendment, each reference
in the Employment Agreement to "this Agreement", "hereunder", "hereof",
"herein" or words of like import referring to the Employment Agreement
shall mean and be a reference to the Employment Agreement as heretofore
amended and as further amended by this Second Amendment.
This Second Amendment constitutes the entire agreement among
the parties pertaining to the subject matter hereof and supersedes all
prior and contemporaneous agreements, understandings, representations
or other arrangements, whether express or implied, written or oral, of
the parties in connection therewith except to the extent expressly
incorporated or specifically referred to herein.
(b) Counterparts. This Second Amendment may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute
but one and the same instrument.
2
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95
(c) Governing Law. This Second Amendment shall be governed by,
and shall be construed and enforced in accordance with, the internal
laws of the State of Ohio, without regard to conflicts of laws
principles.
IN WITNESS WHEREOF, Employer and Employee have signed this Second
Amendment so as of the date hereinabove provided.
CARDINAL REALTY SERVICES, INC.
Attest:
By: /s/ John Bram Bartling, Jr.
--------------------------------
JOHN BRAM BARTLING, JR.
3
96
THIRD AMENDMENT TO EMPLOYMENT AGREEMENT
This Third Amendment to Employment Agreement (this "Third Amendment")
is entered into as of January 1, 1997 by and between John Bram Bartling, Jr.
("Employee") and Cardinal Realty Services, Inc., an Ohio corporation
("Employer").
RECITALS:
A. Employee and Employer are a party to that certain Employment
Agreement dated as of December 1, 1995, as amended by that certain Amendment to
Employment and Award Agreements dated as of April 18, 1996 and that certain
Second Amendment to Employment Agreement dated as of December 20, 1996 (as so
amended, the "Employment Agreement").
B. Terms which are used but not otherwise defined in this Third
Amendment have the meanings given them in the Employment Agreement (including,
without limitation, terms defined in prior Amendments to the Employment
Agreement). The Employer desires to increase the Base Compensation of Employee
for the 1997 fiscal year, to permit the payment of a portion of the Base
Compensation of the Employee for the 1997 fiscal year in shares of Common Stock
and to allow the Company to pay a portion of the Cash Bonus for the 1996 fiscal
year in shares of Common Stock.
NOW THEREFORE, Employer and Employee agree to amend the Employment
Agreement as provided in this Third Amendment:
1. Amendments to Employment Agreement.
(a) Section 3(a)(i) of the Employment Agreement is hereby
amended by deleting the words "and any extension(s) hereof" and
substituting the words "through December 31, 1996" therefor.
(b) Section 3(a) of the Employment Agreement is hereby further
amended by adding the following provisions to the end of said Section
3(a):
(iv) From January 1, 1997 through the term of this Agreement
and any extension(s) thereof, Employee's Base Compensation
shall equal Three Hundred and Forty Thousand Dollars
($340,000) per annum.
(v) The Base Compensation paid to Employee for the year
beginning on January 1, 1997 and ending December 31, 1997
shall be paid as follows:
(A) Two Hundred and Ninety-eight Thousand Seven
Hundred and Fifty Dollars ($298,750) in
cash, and
<PAGE>
97
(B) Forty-one Thousand Two Hundred and Fifty
Dollars ($41,250) in shares of Common Stock
valued at $20.625 per share (or 2,000
shares),
in equal bi-monthly installments of cash and equal quarterly
installments of shares of Common Stock (or 500 shares at the
end of each calendar quarter) of the Employer issuable to the
Trustee for the benefit of Employee .
(c) Section 3(b) of the Employment Agreement is hereby further
amended by adding the following language at the end of Section 3(b):
(v) Notwithstanding the foregoing provisions of this Section
3(b), in the event that Employee shall be entitled to the
payment of a Cash Bonus on account of Employer's 1996 fiscal
year, then, in such event, Employee shall have the option to
elect to receive all or any portion of such Cash Bonus in
shares of Common Stock based upon a per share price of
$20.625, which shares of Common Stock shall be issued to the
Trustee for the benefit of Employee on account (and in lieu)
of all or such portion of Employee's Cash Bonus for Employer's
1996 fiscal year.
2. Miscellaneous.
(a) Effect of Amendment. Except as specifically provided
herein, this Third Amendment does not in any way waive, amend, modify,
affect or impair the terms and conditions of the Employment Agreement,
and all terms and conditions of the Employment Agreement are to remain
in full force and effect unless otherwise specifically amended, waived
or changed pursuant hereto.
On and after the date of this Third Amendment, each reference
in the Employment Agreement to "this Agreement", "hereunder", "hereof",
"herein" or words of like import referring to the Employment Agreement
shall mean and be a reference to the Employment Agreement as heretofore
amended and as further amended by this Third Amendment.
This Third Amendment constitutes the entire agreement among
the parties pertaining to the subject matter hereof and supersedes all
prior and contemporaneous agreements, understandings, representations
or other arrangements, whether express or implied, written or oral, of
the parties in connection therewith except to the extent expressly
incorporated or specifically referred to herein.
(b) Counterparts. This Third Amendment may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute
but one and the same instrument.
(c) Governing Law. This Third Amendment shall be governed by,
and shall be construed and enforced in accordance with, the internal
laws of the State of Ohio, without regard to conflicts of laws
principles.
<PAGE>
98
IN WITNESS WHEREOF, Employer and Employee have signed this Third
Amendment so as of the date hereinabove provided.
CARDINAL REALTY SERVICES, INC.
Attest:
______________________________ By: /s/ John Bram Bartling, Jr.
------------------------------
JOHN BRAM BARTLING, JR.
99
EMPLOYMENT AGREEMENT
BETWEEN CARDINAL REALTY SERVICES, INC.
AND
MARK D. THOMPSON
<PAGE>
100
TABLE OF CONTENTS
Page
1. Employment............................................................. 1
2. Term and Positions..................................................... 2
3. Compensation........................................................... 2
4. Insurance and Other Benefits........................................... 7
5. Payment in the Event of Death or Permanent Disability.................. 9
6. Termination and Further Compensation................................... 10
7. Reimbursement.......................................................... 12
8. Covenants and Confidential Information................................. 12
9. Withholding Taxes...................................................... 13
10. No Conflicting Agreement............................................... 13
11. Severable Provisions................................................... 14
12. Binding Agreement...................................................... 14
13. Arbitration............................................................ 14
14. Notices................................................................ 14
15. Waiver................................................................. 14
16. Miscellaneous.......................................................... 14
17. Governing Law.......................................................... 15
18. Captions and Section Headings.......................................... 15
19. Miscellaneous.......................................................... 16
<PAGE>
101
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into as of the 1st
day of April, 1996, between Cardinal Realty Services, Inc., an Ohio corporation
("Employer"), and Mark D. Thompson ("Employee").
WITNESSETH:
-----------
WHEREAS, Employer and Employee desire to enter into this Agreement to
assure Employer of the services of Employee, and Employee's employment for the
term set forth herein, and to set forth the rights and duties of the parties
hereto.
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties agree as follows:
1. Employment.
(a) Employer hereby employs Employee, and Employee hereby
accepts such employment, upon the terms and conditions hereinafter set
forth.
(b) During the term of this Agreement, or any renewal or
extension hereof (for purposes hereof, all references herein to the
term of this Agreement shall be deemed to include references to the
period of renewal or extension hereof, if any), Employee shall devote
his full time to his employment and perform with reasonable diligence
such duties as are customarily performed by the Executive Vice
President or similar senior executive officer charged with primary
responsibility for merger and acquisition transactions for a company
having the size and structure of Employer and its subsidiaries,
together with such other duties as may be reasonably requested from
time to time by the Board of Directors of Employer (the "Board"), which
duties shall be consistent with the further covenants set forth in
Section 2 of this Agreement.
(c) Employee shall not, without the prior written consent of
Employer, directly or indirectly, during the term of this Employment
Agreement, other than in the performance of duties naturally inherent
in the businesses of Employer or any subsidiary of Employer and in
furtherance thereof, render services of a business, professional or
commercial nature to any other person or firm, for compensation;
provided, however, that so long as it does not interfere with his
full-time employment hereunder, Employee may attend to his personal
outside investments, serve as a director of a corporation which does
not compete with Employer (as provided in Section 8 hereof), and serve
as director, trustee or officer of or otherwise participate in
educational, welfare, social, religious and civic organizations.
Employee may complete the performance of his professional engagements
as legal counsel which are pending on the date of this Agreement;
provided that any such performance does not interfere with the
performance of his employment duties hereunder. For purposes of this
Agreement, all references herein to subsidiaries and affiliates of
Employer shall be deemed to include subsidiaries and affiliates now or
hereafter existing.
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2. Term and Positions.
(a) Subject to the provisions for termination as hereinafter
provided, the term of this Agreement shall begin on April 1, 1996 and
shall continue through March 31, 1997 (the "Original Term"). The
Original Term may be extended for additional terms of one year each
(each, a "Renewal Term") upon the mutual agreement of Employer and
Employee.
(b) Employee shall, without any compensation in addition to
that which is specifically provided in this Agreement, serve as
Executive Vice President of Employer, and a member of the board of
directors and in such other offices or positions with any subsidiary or
affiliate of Employer as shall, from time to time, be assigned
reasonably by the Board (but such office or positions shall be
consistent with the duties, offices or positions hereinbefore named).
It is agreed that in addition to the provisions of Section 4(e) of this
Agreement and any other obligations due him hereunder, Employee shall
be entitled to the protection of the applicable indemnification
provisions of the Articles of Incorporation and Code of Regulations of
Employer and the corporate or partnership organizational documents of
any such subsidiary or affiliate. Employer will use all commercially
reasonable efforts to maintain its directors and officers liability
insurance for the benefit of, among others, Employee. Employer shall
provide Employee, by April 30, 1996, evidence that such insurance has
been obtained, and, if not, what steps Employer plans to take to obtain
such coverage. Further, Employer shall continue to employ such efforts
until coverage is so obtained. For purposes of this Agreement, the
term: (i) "affiliate," when used with reference to Employer, means any
entity which, directly or indirectly through one or more
intermediaries, is controlled by, under common control with, or which
controls, Employer; (ii) "control" means (A) the power to direct the
management and policies of the entity in question, directly or
indirectly, whether through ownership of voting securities, by contract
or otherwise and (B) "controlled" and "controlling" have meanings
correlative to the foregoing; and (iii) "subsidiary" means, with
reference to Employer, any corporation, general or limited partnership,
limited liability company, association or other business entity (A) of
which securities or other ownership interests representing more than
50% of the equity or more than 50% of the ordinary voting power or more
than 50% of the general partners interests are, at the time any
determination is being made, owned, controlled or held by Employer or
(B) that, at the time any determination is being made, is otherwise
controlled, by Employer or one or more subsidiaries of Employer or by
Employer and one or more subsidiaries of Employer.
3. Compensation.
(a) For all services he may render to Employer (and any
subsidiary or affiliate) during the term of this Agreement, Employer
shall pay to Employee base compensation ("Base Compensation") on the
following terms:
(i) For the Original Term and any Renewal Term,
Fourteen Thousand Five Hundred Eighty-three and 33/100 Dollars
($14,583.33) per month.
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103
(ii) Base Compensation payable to Employee under this
Section 3(a) shall be payable in bi-weekly installments.
(iii) Commencing June 30, 1996, Base Compensation may
be increased each fiscal year upon appropriate action by the
Board. If increased, such increased dollar amount shall
thereafter constitute "Base Compensation" for all purposes
under this Agreement.
(b) Employer shall pay to Employee bonus compensation during
the term of this Agreement as follows:
(i) For Employer's 1996 fiscal year, and for each
fiscal year thereafter during which this Employment Agreement
remains in effect, Employer will pay to Employee a cash bonus
("Cash Bonus") determined on the basis of the increase, if
any, of Employer's consolidated earnings before interest,
taxes, depreciation and amortization, determined upon the
application of generally accepted accounting principles,
consistently applied, and subject to the independent audit of
the Company's consolidated income statement for the fiscal
years pertinent thereto by the Company's independent certified
public accountants ("EBITDA") when compared to Employer's
EBITDA for its immediately preceding fiscal year (the
"Comparison EBITDA") and measured as a percentage of
Comparison EBITDA, as follows:
Cash Bonus Expressed as
EBITDA expressed as Percentage Percentage of Base
of Comparison EBITDA Compensation
- ------------------------------ ---------------------------
up to 103% 0
greater than 103% up to 110% Percentage Increase in
Comparison EBITDA
multiplied by 1.5; plus, if
applicable
greater than 101% up to 120% Additional Percentage
Increase in Comparison
EBITDA (above 105%)
multiplied by 2; plus, if
applicable
greater than 120% Additional Percentage
Increase in Comparison
EBITDA multiplied by
2.5, but not to exceed
60% of Base Compensation
(ii) For purposes of determining the Cash Bonus, if any,
payable to Employee on account of Employer's 1996 fiscal year,
Employee and Employer acknowledge and agree that (subject to
any increase pursuant to Section 3(a)(iii) of
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104
this Agreement) Employee's 1996 Base Compensation will equal
One Hundred Thirty-one Thousand Two Hundred Fifty Dollars
($131,250), Comparison EBITDA equals $9,072,649, and the
maximum Cash Bonus payable to Employee on account of
Employer's 1996 fiscal year equals Seventy-eight Thousand
Seven Hundred Fifty Dollars ($78,750).
(iii) Employee's Cash Bonus due under subsections (i) and
(ii) above shall be paid within thirty (30) days after EBITDA
is calculated from the applicable final audited year end
income statements of Employer.
(iv) In addition to the Cash Bonus, for Employer's 1996
fiscal year, and for each fiscal year thereafter during which
this Employment Agreement remains in effect, Employer shall,
and hereby does, grant to Employee a stock bonus ("Stock
Bonus"; and, together with the Cash Bonus, the "Bonus")
payable in shares of Employer's common stock, without par
value (the "Common Stock"), in accordance with and subject to
the Employer's Incentive Equity Plan, as amended, and a
Deferred Shares Award Agreement (the "Deferred Shares
Agreement") to be entered into between Employer and Employee
in customary form reasonably acceptable to Employer and
Employee. The dollar amount of the Stock Bonus will be
determined on the same basis as the Cash Bonus (including the
limitations set forth in Section 3(b)(ii) and the partial-year
provision set forth in Section 6(c)), except that the dollar
value of the Stock Bonus as a percentage of Base Compensation
will be as follows:
EBITDA expressed as Percentage Dollar Value of Stock Bonus
of Comparison EBITDA Expressed as Percentage
- ------------------------------ of Base Compensation
---------------------------------
up to 103% 0
greater than 103% up to 105% Equivalent to Percentage
Increase in Comparison EBITDA;
plus, if applicable
greater than 105% up to 110% Additional Percentage Increase in
Comparison EBITDA multiplied by
2; plus, if applicable
greater than 110% Additional Percentage Increase in
Comparison EBITDA multiplied by
3, but not to exceed 30% of Base
Compensation
(v) The number of shares constituting the Stock Bonus payable
to Employee will be determined by dividing (A) the dollar
value of the Stock Bonus determined in accordance with the
table above by (B) the closing price of Employer's Common
Stock on the Nasdaq National Market System, or if Employer's
Common Stock is not
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105
listed or admitted to trading in such system, the principal
securities exchange on which Employer's Common Stock is listed
or admitted to trading on the last trading date in the period
for which the Stock Bonus is calculated (i.e. December 31,
March 31 or the last closing price for the Common Stock
immediately preceding the date Employee ceases employment with
Employer). Any Stock Bonus which Employee is entitled to
receive from Employer shall be issued on the same date as the
Cash Bonus for the same period. The provisions of Employer's
Incentive Equity Plan, as amended, regarding fractional shares
will apply to the Stock Bonus and the Deferred Shares
Agreement.
(c) As additional inducement to Employee to enter into this
Agreement, Employer shall issue to Employee, at no additional
consideration or cost to Employee, up to five thousand (5,000) shares
of the Common Stock for each share of Common Stock of Employer
purchased by Employee from the date of this Agreement through and
including March 31, 1997 (the "Matching Stock"). Any Matching Stock
which Employee is entitled to receive from Employer shall be issued to
Employee within thirty (30) days of Employee's purchase of any shares
of Common Stock and shall be subject to all restrictions and
limitations imposed by applicable state and federal securities laws and
regulations.
(d) Further, Employer shall, and hereby does, grant to
Employee rights to receive additional shares of Common Stock pursuant
to the terms of Employer's Incentive Equity Plan, as amended, and
subject to the terms and conditions of those certain Restricted Shares
Agreements (the "Restricted Shares Agreements") to be entered into
between Employer and Employee, in customary forms reasonably acceptable
to Employer and Employee (such Common Stock to be referred to herein as
"Restricted Stock") as follows:
(i) seven thousand five hundred (7,500) shares of
Restricted Stock, one-third of which shall vest on each of the
third, fourth and fifth anniversaries of the Date of Grant (as
defined, and more particularly set forth, in the applicable
Restricted Shares Agreement), which issuance of shares shall
be made effective on April 15, 1996. As used hereunder, the
term "vest" shall mean that Employee shall own the Restricted
Shares free from any restriction, encumbrance, or limitation,
except for any such restriction or limitation imposed by
applicable state and federal securities laws and regulations;
(ii) nine thousand (9,000) shares of Restricted Stock,
which shall be issued to Employee on April 15, 1996 and shall
vest as follows (and as more particularly set forth under the
applicable Restricted Shares Agreement):
A. one-third when the number of issued and
outstanding shares of Employer's Common Stock
multiplied by the closing price of Employer's Common
Stock on the Nasdaq National Market System, or if
Employer's Common Stock is not listed or admitted to
trading in such system, the principal securities
exchange or market on which Employer's Common Stock
is listed or admitted to trading, plus the
liquidation value of all issued and
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106
outstanding preferred stock of Employer ("Market
Capitalization"), exceeds Ninety Million Dollars
($90,000,000) for a continuous period over three (3)
consecutive months;
B. one-third when the Market Capitalization
exceeds One Hundred Twenty Million Dollars
($120,000,000) for a continuous period three (3)
consecutive months; and
C. one-third when the Market Capitalization
exceeds One Hundred Fifty Million Dollars
($150,000,000) for a continuous three consecutive
month period.
(iii) Notwithstanding the foregoing, the vesting of all
Restricted Stock and Stock Options (as defined hereinbelow)
granted under this Agreement shall be accelerated in the event
of any of the following:
(A) Employer shall merge or be merged or
consolidated with, another corporation and as a
result of such merger or consolidation less than
seventy percent (70%) of the outstanding voting
securities of the surviving or resulting corporation
shall be owned in the aggregate by the former
shareholders of Employer as the same shall have
existed immediately prior to such merger or
consolidation;
(B) Employer shall sell or transfer to one
or more persons, corporations or entities, in a
single transaction or a series of related
transactions, more than one-half of the assets of
Employer unless by an affirmative vote of two-thirds
of the members of the Board, the transaction or
transactions are exempted from the operation of this
provision based on a good faith finding that the
transaction or transactions are not within the
intended scope of this definition for purposes of
this Agreement;
(C) a person, within the meaning of Section
3(a)(9) or Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended and as in effect on
the date hereof the "Exchange Act"), shall become the
beneficial owner (as defined in Rule 13d-3 of the
Exchange Act) of thirty percent (30%) or more of the
outstanding voting securities of Employer; or
(D) any shareholder of Employer shall
nominate a person to the Board, which nominee shall
be elected to the Board without receiving the prior
endorsement of the Board or its Nominating Committee.
(e) Employer shall grant to Employee options to purchase
twelve thousand five hundred (12,500) shares of Employer's Common Stock
("Stock Options") in accordance with, and subject to, the Employer's
Incentive Equity Plan, as amended, and a Non-Qualified Stock Option
Agreement to be entered into between Employer and Employee, in
customary form
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reasonably acceptable to Employer and Employee (the "Option Award
Agreement" and, together with the Deferred Shares Agreement and the
Restricted Shares Agreements, the "Award Agreements"). The Stock
Options shall have an exercise price equal to the closing price of
Employer's Common Stock on the NASDAQ National Market System on March
29, 1996, one-fifth of which shall vest on the first, second, third,
fourth and fifth anniversaries of the date of such grant, which grant
shall be made pursuant to the Option Award Agreement.
(f) Employee shall be entitled to participate in any pension
or profit- sharing plan covering highly compensated salaried employees
which the Employer may have in effect or hereafter adopt during the
term of this Employment Agreement.
(g) Employer represents and warrants to Employee that unless
Employee makes an election pursuant to Section 83(b) of the Internal
Revenue Code of 1986, as amended (the "Code"), Employee shall not have
any taxable income solely by reason of the grants described in Sections
3(c), (d) and (e) hereof. Employee understands that he will have
taxable income upon the vesting of Restricted Stock, the exercise of
the Stock Options, the disposition of the rights granted in Sections
3(c), (d) and (e) hereof, or other similar event.
(h) If Employee makes an election pursuant to Section 83(b) of
the Code in connection with Restricted Stock acquired by Employee
pursuant to Section 3(d) hereof, Employer shall make a loan to Employee
in an amount equal to forty-eight percent (48%) (subject to appropriate
adjustment if the combined effective federal, state, and local income
tax rate on compensation income changes in 1996) or any subsequent year
in which income may be recognized) of the compensation income
recognized by Employee for federal income tax purposes in connection
with such election. The loan shall (i) bear interest at a rate per
annum equal to that charged from time to time to Employer under
Employer's senior secured credit facility (which credit facility, as of
the date of this Agreement is provided to Employer by The Provident
Bank) plus two percent (2%), (ii) be secured by a pledge of the
Restricted Stock, (iii) be due upon the earliest of three (3) years
from the date of the loan, the sale of the Restricted Stock (to the
extent of the proceeds of such sale with any remaining balance being
thereafter due as originally scheduled), or one (1) year after
Employee's termination of employment with Employer, and (iv) be
evidenced by a promissory note and a pledge agreement in customary form
reasonably acceptable to Employer and Employee.
(i) With respect to the Restricted Stock, if Employee does not
make an election pursuant to Section 83(b) of the Code as described in
Section 3(g) of this Agreement, and with respect to the Stock Options,
upon each occasion Employee recognizes compensation income, as a result
of the vesting of the Restricted Stock or the exercise of the Stock
Options, Employee may borrow from Employer an amount equal to
forty-eight percent (48%) (subject to adjustment as described in
Section 3(h) of this Agreement) of the compensation income so
recognized by Employee, provided that Employee is still employed by
Employer. The loan shall have the same terms and conditions described
in Section 3(h) of this Agreement.
4. Insurance and Other Benefits.
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(a) Employee shall be entitled to such medical,
hospitalization, health, accident, life and disability insurance and
pension plan benefits and such other similar employment privileges and
benefits as are afforded generally from time to time to other executive
officers of Employer, or subsidiaries of Employer, and in no event
shall Employee be provided benefits at a level less generous than those
benefits provided to any other officer or employee of Employer, or any
subsidiary of Employer. Further, with respect to medical coverage,
Employer shall provide medical coverage for Employee and his dependents
at least equal to the value of coverage afforded Employee on the
effective date of this Agreement if such coverage is available on
commercially reasonable terms.
(b) Employee shall be entitled to periods of vacation and sick
leave allowance each year, which shall be the same as provided under
Employer's vacation and sick leave policy for executive officers, but
in no event shall Employee be entitled to, with full pay and benefits,
less than four (4) weeks paid vacation and customary holidays.
(c) In connection with Employee's regular travel expenses,
Employer shall provide Employee a monthly allowance equal to One
Thousand Eight Hundred Sixty-six and 66/100 Dollars ($1,866.66) per
month, payable on the last business day of each month commencing April
30, 1996 and continuing through and including March 31, 1997 in order
to compensate Employee for expenses related to Employee's travel to and
from Employer's principal place of business in Columbus, Ohio. Employer
and Employee acknowledge and agree that due to the requirements of
Employee's position as Employer's Executive Vice President of Corporate
Acquisitions, which position will require Employee to travel
extensively to various locations throughout the United States and
possibly abroad, that Employee may maintain his principal place of
business in Cleveland, Ohio; provided that Employee shall travel to
Columbus, Ohio as frequently as requested by Employer. The allowance
set forth in this Section 4(c) is in addition to reimbursement for all
of Employee's reasonable expenses incurred in the performance of his
duties hereunder, including, without limitation, travel to any location
other than Columbus, Ohio which reimbursements are governed by Section
7 below. Employee shall bear sole responsibility for documenting the
deductibility of amounts paid pursuant to this subsection if so
required by the Internal Revenue Service, but shall not be required to
provide such documentation to Employer unless Employer is required to
produce same in connection with an audit.
(d) Notwithstanding the foregoing Section 4(c) of this
Agreement, in the event that Employee moves his principal residence to
the Columbus, Ohio area on or before March 31, 1997, Employer will pay
Employee a lump sum of Sixty Thousand Dollars ($60,000) for relocation
expenses. Upon such payment made in connection with this Section 4(d),
payments made to Employee pursuant to the foregoing Section 4(c) shall
thereupon cease. Payment to Employee, if any, due under this Section
4(d) will be payable on or before ten (10) days following the date upon
which Employee acquires title to his new principal residence in the
Columbus, Ohio area or enters into a binding lease agreement for a
principal residence in the Columbus, Ohio area. Employee shall bear
sole responsibility for documenting the deductibility of amounts paid
pursuant to this subsection if so required by the Internal Revenue
Service, but shall not be required to provide such documentation to
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Employer unless Employer is required to produce same in connection with
an audit. For purposes of this Section 4(d), Employee's principal
residence will be the primary residence of each of Employee, his
spouse, and his son, Ethan.
(e) Employer shall indemnify, to the full extent then
permitted by law, Employee if he was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative,
by reason of the fact that he is or was a member of the Board or an
officer or agent of Employer, or is or was serving at the request of
Employer as a director, trustee, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise.
Employer shall pay expenses, including reasonable attorney's fees,
incurred by Employee in defending any such action, suit or proceeding
as they are incurred, in advance of the final disposition thereof, and
may pay, in the same manner and to the full extent then permitted by
law, such expenses incurred by any other person. The indemnification
and payment of expenses provided hereby shall not be exclusive of, and
shall be in addition to, any other rights granted to Employee seeking
indemnification under any law, the Articles of Incorporation of
Employer, any agreement, vote of shareholders or disinterested members
of the Board, or otherwise, both as to action in official capacities
and as to action in another capacity while he is a member of the Board,
officer, employee or agent of Employer, and shall continue as to
Employee after he has ceased to be a member of the Board, trustee,
officer, employee or agent and shall inure to the benefit of the heirs,
executors, and administrators of Employee.
(f) Employee shall be reimbursed for the cost of reasonable
legal fees incurred by him in connection with negotiating and drafting
this Agreement and ancillary matters as they relate to this Agreement,
including, without limitation, the issuance of the Restricted Stock and
Stock Options and the negotiation and drafting of the Award Agreements.
5. Payment in the Event of Death or Permanent Disability.
(a) In the event of Employee's death or Permanent Disability
(as defined hereinbelow) during the term of this Agreement, Employee or
his estate, as the case may be, shall be entitled to receive (i) an
amount equal to (A) the lesser of (x) any remaining Base Compensation
for the Original Term or any then current Renewal Term or (y) one year
of Base Compensation reduced by (B) any and all payments made to
Employee pursuant to any disability insurance policy maintained by
Employer for Employee's benefit pursuant to Section 4(a) of this
Agreement or otherwise (the "Disability Policy"), (ii) a pro rata
portion of the Bonus, if any, applicable to the fiscal year in which
such death or Permanent Disability occurs, as such bonuses are
determined under Section 3(b) of this Agreement, and (iii) any shares
of Restricted Stock and Stock Options that have vested in accordance
with the provisions of the Award Agreements. Such pro rata portion of
the Bonus shall be determined by a multiplying a fraction (the
numerator of which shall be the number of days in the applicable fiscal
year elapsed prior to the date of death or Permanent Disability, as the
case may be, and the denominator of which shall be three hundred
sixty-five (365)) by the amount of the Bonus
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that would have been payable, if any, pursuant to such Section 3(b), if
Employee had remained employed under this Agreement for the entire
applicable fiscal year.
(b) Upon death or Permanent Disability of Employee, the Bonus,
if any, shall be paid when and as provided in Section 3(b) of this
Agreement. The other compensation to be paid pursuant to this Section 5
shall be paid, at the election of Employee or Employee's designated
beneficiary (who shall be his wife, unless he gives Employer written
notice of a different designation), either (i) in two (2) equal annual
installments paid within the two (2) year period beginning on the date
of such death or Permanent Disability, as the case may be, or (ii) in
one (1) lump sum paid within ninety (90) days after the date of such
death or Permanent Disability, as the case may be.
(c) Employee shall be entitled to no further compensation or
other benefits under this Agreement, except as to that portion of any
benefits accrued and earned by him hereunder up to and including the
date of such death or Permanent Disability.
(d) For purposes of this Section 5, Employee's Permanent
Disability shall be deemed to occur on the date after the first to
occur of (i) ninety (90) consecutive days, or (ii) one hundred eighty
(180) days cumulatively in any twelve (12) month period, of Employee's
inability to provide the services required hereunder of him due to
sickness or injury ("Permanent Disability").
6. Termination and Further Compensation.
(a) The employment of Employee under this Agreement, and the
term hereof, subject to Employee's rights set forth elsewhere herein,
may be terminated by Employer:
(i) on death or Permanent Disability of Employee, or
(ii) for cause at any time by action of the Board.
For purposes hereof, the term "cause" shall mean:
A. an intentional act of fraud,
embezzlement, theft or any other material violation
of law in connection with Employee's duties or in the
course of his employment with Employer;
B. intentional wrongful damage to material
assets of Employer;
C. intentional wrongful disclosure of
material confidential information of Employer;
D. intentional wrongful engagement in any
competitive activity which would constitute a
material breach of the duty of loyalty; or
E. breach of any material term of this
Agreement.
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111
No act, or failure, to act, on the part of Employee shall be
deemed "intentional", or provide the basis for termination for
cause, if it was due primarily to an error in judgment or
negligence without bad faith or reckless disregard, but shall
be deemed "intentional" only if done, or omitted to be done,
by Employee not in good faith and without reasonable belief
that his action or omission was in or not opposed to the best
interest of Employer. Failure to meet performance standards or
objectives of Employer shall not constitute cause for purposes
hereof. Further, in the event Employer terminates Employee for
"cause", Employer shall give Employee written notice as to the
specific circumstances giving rise to its decision to
terminate Employee for cause ("Notice"), and, Employee shall
be given the opportunity to respond, with counsel, to
Employer's decision and Employer's articulated circumstances,
such responses shall be before the Board of Directors of
Employer and shall take place within fourteen (14) days of
Employer's Notice. Any termination by reason of the foregoing
shall not be in limitation of any other right or remedy
Employer may have under this Agreement or otherwise. On any
termination of this Agreement, Employee shall be deemed to
have resigned from all offices and directorships held by
Employee in Employer and any subsidiaries and affiliates of
Employer.
(b) In the event of termination of this Agreement for any of
the reasons set forth in Section 6(a)(ii) hereof, Employee shall be
entitled to no further compensation or other benefits under this
Agreement, except as to (i) that portion of any unpaid Base
Compensation reduced by any and all payments made, or to be made, to
Employee pursuant to the Disability Policy and other benefits accrued
and earned by him hereunder up to and including the effective date of
such termination; and (ii) any of his shares of Restricted Stock and
Stock Options that have vested in accordance with the provisions of
Section 3(c) of this Agreement.
(c) In the event that Employee's employment is terminated
without cause during the Original Term of this Agreement or in the
event that the Original Term of this Agreement shall have expired and
shall not have been renewed and Employee thereupon ceases to be
employed by Employer, Employee shall be entitled to receive: (i) an
amount equal to his Base Compensation, and any other benefits due
Employee under Section 4 of this Agreement, payable for the then
unexpired portion of the Original Term, if any, plus the immediately
succeeding nine (9) months; (ii) the Bonus, if any, applicable to the
fiscal year in which such cessation of employment occurs, as such Bonus
is determined under Section 3(b) of this Agreement but on a prorated
basis calculated in the manner contemplated by Section 5(a) of this
Agreement; and (iii) all of his shares of Restricted Stock awarded
pursuant to Section 3(d)(i) of this Agreement (but not, however, any
shares of Restricted Stock awarded pursuant to Section 3(d)(ii) of this
Agreement which have not theretofore vested) and Stock Options
immediately fully vested, and otherwise free of any forfeiture
provisions or other restrictions imposed under the Award Agreements
except for any restrictions or limitations imposed by applicable state
and federal securities laws and regulations. In the event that
Employee's employment is terminated without cause during a Renewal
Term, Employee will be entitled to receive all of the compensation and
benefits provided for in the immediately preceding sentence; except
that Employee's Base Compensation will continue solely for the nine (9)
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112
month period immediately following such termination, irrespective of
the originally scheduled duration of the then current Renewal Term.
Upon any such termination by Employer, other than for "cause",
Employee's obligations to Employer hereunder shall terminate.
7. Reimbursement. Employer shall reimburse Employee or provide him with
an expense allowance during the term of this Agreement, for travel,
entertainment and other expenses reasonably and necessarily incurred by Employee
in performing services hereunder or, generally, the promotion of Employer's
business. Employee shall furnish such documentation with respect to
reimbursement to be paid under this Section 7 as Employer shall reasonably
request.
8. Covenants and Confidential Information.
(a) Employee acknowledges Employer's reliance and expectation
of Employee's continued commitment of performance of his duties and
responsibilities during the term of this Agreement. In light of such
reliance and expectation on the part of Employer, Employee agrees that
during the period beginning on the effective date of this Agreement and
ending eighteen (18) months after the termination of Employee's
employment for cause or Employee's resignation from employment with
Employer, he shall not, directly or indirectly, do or suffer any of the
following:
(i) own, manage, control or participate in the
ownership, management, or control of, or be employed or
engaged by or otherwise affiliated or associated as a
consultant, independent contractor or otherwise with, any
other corporation, partnership, proprietorship, firm,
association, or other business entity, or otherwise engage in
any business, which directly of indirectly acquires, or
solicits to acquire, property management agreements or any
other service agreement directly relating to any property with
respect to which Employer or any of its subsidiaries or
affiliates has contracted to provide (or is actively
negotiating to provide) similar services on the date that
Employee's employment relationship with Employer is terminated
hereunder; provided, however, that the ownership of not more
than one percent (1%) of the stock of any publicly-traded
corporation shall not be deemed a violation of this covenant;
(ii) employ, assist in employing, or solicit for
employment any employee or officer of Employer or any of
Employer's affiliates or subsidiaries who was employed or
retained at any time during the one (1) year period preceding
the date on which Employee's employment with Employer is
terminated;
(iii) induce any person who is an employee or officer of
Employer or any of Employer's affiliates or subsidiaries to
terminate said relationship in such a manner which is not in
furtherance of Employer's interest; or
(iv) except in performing services hereunder, disclose,
divulge, discuss, copy or otherwise use or suffer to be used
in any manner, in competition with, or contrary to the
interests of, Employer or any of Employer's affiliates or
subsidiaries
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entities, the proprietary customer lists, limited partner
lists, research or data or other trade secrets of Employer or
any of Employer's affiliates or subsidiaries, it being
acknowledged by Employee that any such proprietary information
regarding the business of Employer and Employer's affiliates
or subsidiaries entities compiled or obtained by, or furnished
to, Employee while Employee shall have been employed by or
associated with Employer, and which has not been publicly
disclosed by Employer or which is otherwise not available in
the public domain, is confidential information and Employer's
property.
(b) Employee expressly agrees and understands that the remedy
at law for any breach by him of this Section 8 will be inadequate and
that the damages flowing from such breach are not readily susceptible
to being measured in monetary terms. Accordingly, it is acknowledged
that upon adequate proof of Employee's violation of any legally
enforceable provision of this Section 8, Employer shall be entitled to
immediate injunctive relief and may obtain a temporary order
restraining any threatened or further breach. Nothing in this Section 8
shall be deemed to limit Employer's remedies at law or in equity for
any breach by Employee of any of the provisions of this Section 8 which
may he pursued or availed of by Employer.
(c) Employee has carefully considered the nature and extent of
the restrictions upon him and the rights and remedies conferred upon
Employer under this Section 8, and hereby acknowledges and agrees that
the same are reasonable in time and territory, are designed to
eliminate competition which otherwise would be unfair to Employer, do
not stifle the inherent skill and experience of Employee, would not
operate as a bar to Employee's sole means of support, are fully
required to protect the legitimate interests of Employer and do not
confer a benefit upon Employer disproportionate to the detriment to
Employee.
9. Withholding Taxes. All payments to Employee shall be subject to
withholding on account of federal, state and local taxes as required by law. Any
amounts remitted by Employer to the appropriate taxing authorities as taxes
withheld by Employer from Employee on income realized by Employee with respect
to the vesting of his shares of Restricted Stock shall reduce the amounts
payable by Employer to Employee by way of compensation or otherwise. If any
particular payment required hereunder is insufficient to provide the amount of
such taxes required to be withheld, Employer may withhold such taxes from any
other payment due Employee. In the event all cash payments due Employee are
insufficient to provide the required amount of such withholding taxes, Employee,
within thirty (30) days of written notice from Employer, shall pay to Employer
the amount of such withholding taxes in excess of all cash payments due Employee
at the time such withholding is required to be made by Employer, provided,
however, the foregoing shall not be deemed to limit Employee's right to receive
loans from Employer to fund income tax obligations as set forth in Section 3 of
this Agreement.
10. No Conflicting Agreement. The parties hereto represent and warrant
to each other that they are not a party to any agreement, contract or
understanding, whether employment or otherwise, which would restrict or would
prohibit them from undertaking or performing in accordance with the terms and
conditions of this Agreement. Employer represents and covenants that its
entering into this Agreement has been duly authorized and ratified, and that it
has full authority
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to consummate the undertakings set forth herein including, without limitation,
the grant of the Restricted Stock and Stock Options to Employee.
11. Severable Provisions. The provisions of this Agreement are
severable and if any one or more provisions may be determined to be illegal or
otherwise unenforceable, in whole or in part, the remaining provisions and any
partially unenforceable provision to the extent enforceable in any jurisdiction
shall, nevertheless, be binding and enforceable.
12. Binding Agreement. The rights and obligations of Employer under
this Agreement shall inure to the benefit of, and shall be binding upon,
Employer and its successors and assigns, and the rights and obligations (other
than obligations to perform services) of Employee under this Agreement shall
inure to the benefit of, and shall be binding upon, Employee and his heirs,
personal representatives and estate. Employer agrees and acknowledges that the
services Employee is providing Employer are personal to Employer, and Employer
shall not have the right to assign this Agreement without Employee's written
consent.
13. Arbitration. Any controversy or claim arising out of or relating to
this Agreement, or the breach thereof, shall be settled by arbitration in
accordance with the Rules of the American Arbitration Association then
pertaining in the City of Columbus, Ohio, and judgment upon the award rendered
by the Arbitrator or Arbitrators may be entered in any Court having jurisdiction
thereof. The Arbitrator or Arbitrators shall be deemed to possess the powers to
issue mandatory orders and restraining orders in connection with such
arbitration; provided, however, that nothing in this Section 13 shall be
construed so as to deny Employer the right and power to seek and obtain
injunctive relief in a court of equity for any breach or threatened breach of
Employee of any of his covenants contained in Section 8(a) of this Agreement.
14. Notices. Any notice to be given under this Agreement shall be
personally delivered in writing or shall have been deemed duly given when
received after it is posted in the United States mail, postage prepaid,
registered or certified, return receipt requested, and if mailed to Employer,
shall be addressed to its principal place of business, attention: General
Counsel, and if mailed to Employee, shall be addressed to him at his home
address last known on the records of Employer, or at such other address or
addresses as either Employer or Employee may hereafter designate in writing to
the other.
15. Waiver. The failure of either party to enforce any provision or
provisions of this Agreement shall not in any way be construed as a waiver of
any such provision or provisions as to any future violations thereof, nor
prevent that party thereafter from enforcing each and every other provision of
this Agreement. The rights granted the parties herein are cumulative and the
waiver of any single remedy shall not constitute a waiver of such party's right
to assert all other legal remedies available to it under the circumstances.
16. Miscellaneous. This Agreement supersedes all prior agreements and
understandings between the parties and may not be modified or terminated orally.
No modification, termination or attempted waiver shall be valid unless in
writing and signed by the party against whom the same it is sought to be
enforced.
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17. Governing Law. This Agreement shall be governed by and construed
according to the laws of the State of Ohio.
18. Captions and Section Headings. Captions and section headings used
herein are for convenience and are not a part of this Agreement and shall not be
used in construing it.
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19. Miscellaneous. Where necessary or appropriate to the meaning
hereof, the singular and plural shall be deemed to include each other, and the
masculine and neuter shall be deemed to include each other.
IN WITNESS WHEREOF, the parties have executed this Employment Agreement
on the day and year first set forth above.
"EMPLOYER"
ATTEST: CARDINAL REALTY SERVICES, INC.
By: John B. Bartling, Jr.
- ------------------------------ ---------------------------------
JOHN B. BARTLING, JR.,
President and Chief Executive
Officer
- ------------------------------
"EMPLOYEE"
- ------------------------------
Mark D. Thompson
----------------------------------
MARK D. THOMPSON
- ------------------------------
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AMENDMENT TO EMPLOYMENT AND AWARD AGREEMENTS
--------------------------------------------
This Amendment to Employment and Award Agreements (this "Amendment") is
entered into as of April 18, 1996 (so as to be effective: (i) in the case of the
Employment Agreement (as defined below) as of the 1st day of April, 1996; and
(ii) in the case of the Award Agreements (as defined below) as of April 15,
1996) by and between Mark D. Thompson ("Employee") and Cardinal Realty Services,
Inc., an Ohio corporation ("Employer").
RECITALS:
---------
A. Employee and Employer are parties to that certain Employment
Agreement dated as of April 1, 1996 (the "Employment Agreement").
B. Pursuant to the Employment Agreement, Employee has received certain
Restricted and Deferred Share Awards ("Share Awards") of Employer's common
stock, no par value (the "Stock") under Employer's Amended and Restated 1992
Incentive Equity Plan (the "Incentive Equity Plan"), as well as Employer's
agreement to issue or deliver "Matching Stock" to Employee, as follows:
1. Deferred Share Award related to Employee's Stock Bonus (as
defined in the Employment Agreement) pursuant to Section 3(b), clauses
(iv) and (v), of the Employment Agreement and that certain Deferred
Shares Agreement dated as of April 15, 1996 between Employer and
Employee;
2. Seven thousand five hundred (7,500) shares of Restricted
Stock pursuant to Section 3(d)(i) of the Employment Agreement and that
certain Restricted Shares Agreement (Stock Award) between Employer and
Employee dated as of April 15, 1996;
3. Nine thousand (9,000) shares of Restricted Stock pursuant
to Section 3(d)(ii) of the Employment Agreement and that certain
Restricted Shares Agreement (Market Cap) between Employer and Employee
dated as of April 15, 1996; and
4. Employer's agreement (as set forth in Section 3(c) of the
Employment Agreement) to issue up to five thousand (5,000) shares of
Stock to Employee on account of each share of Stock which Employee
purchases for his own account from April 1, 1996 through March 31,
1997.
C. Employer has afforded Employee and certain other senior executive
officers of Employer with the opportunity to defer federal income taxes which
may otherwise be payable on account of the issuance or vesting of shares of the
Stock by establishing an Executive Deferred Compensation Plan dated April 18,
1996 (the "Deferred Compensation Plan") and by entering into that certain
Executive Deferred Compensation Rabbi Trust Agreement between Employer and The
Provident Bank, a state chartered bank, as Trustee (together with its
successors, "Trustee"), dated as of April 18, 1996 (the "Trust Agreement").
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D. Employee has heretofore taken steps to defer federal income taxes
otherwise payable in respect of the issuance or vesting of shares of the Stock
by executing that certain equity deferral election dated April 1, 1996 thereby
electing to defer his actual receipt of the Stock pursuant to a Deferred
Compensation Arrangement and Rabbi Trust to be established by Employer.
E. Employer has now formally adopted the Deferred Compensation Plan and
entered into the Trust Agreement and, pursuant to Employee's prior election,
Employee and Employer desire to cause the Stock to be issued to and held by the
Trustee for his benefit in accordance with the Trust Agreement.
F. Employer and Employee desire to refine the provisions in the
Employment Agreement for Employee's Cash Bonus (as defined in the Employment
Agreement) and Stock Bonus.
AMENDMENTS
----------
1. Amendments to Award Agreements. Concurrently with the execution and
delivery of this Amendment, Employer and Employee will execute and deliver
Amended and Restated Award Agreements in the forms of Exhibits "A" through "C"
hereto. The Amended and Restated Award Agreements will provide that all
Restricted and Deferred Shares will be issued to the Trustee for the benefit of
Employee in accordance with the provisions of the Deferred Compensation Plan and
Trust Agreement. The Award Agreements will also eliminate any references to the
Incentive Equity Plan inasmuch as the Stock formerly subject to the Share Awards
will not be issued under the Incentive Equity Plan.
2. Amendments to Employment Agreement. The Employment Agreement is
hereby amended as follows:
(a) The words "taxes, depreciation and amortization" are
hereby deleted from Section 3(b)(i) of the Employment Agreement and the
following words are hereby added to Section 3(b)(i) of the Employment
Agreement following the word "interest" as it appears in the fifth line
thereof: "(excluding, however, interest expense on account of mortgage
loans secured by real property in which the Company retains, directly
or indirectly, a one hundred percent (100%) equity ownership interest),
taxes, depreciation and amortization; with such earnings, however,
being further adjusted so as to exclude all non-recurring items,
including, without limitation, loan fees which the Company receives
from limited partnerships or other entities in which it retains a
minority interest and the accounts of which are not consolidated in the
Company's financial statements, net income from disposal of non-core
assets, restructuring costs and all other extraordinary gains or
losses; all as".
(b) The third entry in the table set forth in Section 3(b)(i)
of the Employment Agreement is hereby deleted in the following entry is
substituted therefore:
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Greater than 110% Additional Percentage Increase in
up to 120% Comparison EBITDA (above 110%)
multiplied by 2; plus, if applicable,
--------------
(c) The dollar amount $9,072,649 relating to "Comparison
EBITDA" as it appears in Section 3(b)(ii) of the Employment Agreement
is hereby deleted and the dollar amount "$7,606,000" is hereby
substituted therefor.
(d) The words "the Employer's Incentive Equity Plan, as
amended, and" are hereby deleted from Section 3(b)(iv) of the
Employment Agreement.
(e) The last sentence of Section 3(b)(v) of the Employment
Agreement is hereby deleted and the following sentence is substituted
therefor: "No fractional share shall be payable to Employee in
connection with the Stock Bonus, but Employee will be entitled to a
cash payment equal to the dollar value of any fractional share to which
he would otherwise be entitled under the Stock Bonus, to be paid to
Employee together with the payment of Employee's Cash Bonus hereunder."
(f) The words "shall issue to Employee" as they appear in
Section 3(c) of the Employment Agreement are hereby deleted and the
following language is substituted therefor: "shall issue to The
Provident Bank, a state chartered bank, in its capacity as Trustee
under that certain Executive Deferred Compensation Rabbi Trust
Agreement dated as of April 18, 1996 (the "Trust Agreement"), or any
successor trustee thereunder ("Trustee"), for the benefit of Employee".
(g) The second sentence of Section 3(c) of the Employment
Agreement is hereby deleted and the following sentence is substituted
therefor: "Any Matching Stock which Trustee is entitled to receive from
Employer shall be issued to Trustee within thirty (30) days of
Employee's purchase of any shares of Common Stock and shall be subject
to all restrictions and limitations imposed by applicable state and
federal securities laws and regulations."
(h) The words "to the terms of Employer's Incentive Equity
Plan, as amended" are hereby deleted from the first sentence of Section
3(d) of the Employment Agreement.
(i) The following language is added to the end of Section
3(d)(i) of the Employment Agreement: "and except for the terms of
Employer's Executive Deferred Compensation Plan and the terms of the
Trust Agreement".
(j) The term "Employee" is hereby deleted from the second line
of Section 3(d)(ii) of the Employment Agreement, and the term "Trustee"
is substituted therefor.
3
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3. Miscellaneous.
(a) Effect of Amendment. Except as specifically provided
herein, this Amendment does not in any way waive, amend, modify, affect
or impair the terms and conditions of the Employment Agreement, and all
terms and conditions of the Employment Agreement are to remain in full
force and effect unless otherwise specifically amended, waived or
changed pursuant hereto.
On and after the date of this Amendment, each reference in the
Employment Agreement to "this Agreement", "hereunder", "hereof",
"herein" or words of like import referring to the Employment Agreement
shall mean and be a reference to the Employment Agreement as amended by
this Amendment.
This Amendment constitutes the entire agreement among the
parties pertaining to the subject matter hereof and supersedes all
prior and contemporaneous agreements, understandings, representations
or other arrangements, whether express or implied, written or oral, of
the parties in connection therewith except to the extent expressly
incorporated or specifically referred to herein.
(b) Counterparts. This Amendment may be executed in any number
of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute
but one and the same instrument.
(c) Governing Law. This Amendment shall be governed by, and
shall be construed and enforced in accordance with, the internal laws
of the State of Ohio, without regard to conflicts of laws principles.
IN WITNESS WHEREOF, Employer and Employee have signed this Amendment so
as to be effective as hereinabove provided.
CARDINAL REALTY SERVICES, INC.
Attest:
By: /s/ John B. Bartling, Jr.
- ------------------------- --------------------------------
John B. Bartling, Jr.
President and Chief Executive Officer
- -------------------------
- ------------------------- /s/ Mark D. Thompson
------------------------
MARK D. THOMPSON
- -------------------------
4
121
SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
----------------------------------------
This Second Amendment to Employment Agreement (this "Second Amendment")
is entered into as of December 20, 1996 by and between Mark D. Thompson
("Employee") and Cardinal Realty Services, Inc., an Ohio corporation
("Employer").
RECITALS:
A. Employee and Employer are a party to that certain Employment
Agreement dated as of April 1, 1996, as amended by that certain Amendment to
Employment and Award Agreements dated as of April 18, 1996 (as so amended, the
"Employment Agreement").
B. Terms which are used but not otherwise defined in this Second
Amendment (including, without limitation, terms defined in the Amendment to
Employment and Award Agreements) have the meanings given them in the Employment
Agreement. The Employer desires to extend the period during which Employee is
entitled to receive shares of Matching Stock from Employer pursuant to Section
3(c) of the Employment Agreement and, further, to allow Employee to elect to
receive payment of his Cash Bonus, if any, on account of Employer's 1996 fiscal
year in shares of Common Stock in lieu of cash with any such shares of Common
Stock received by Employee pursuant to such election qualifying as purchases of
Common Stock by Employee for purposes of Section 3(c) of the Employee Agreement.
NOW THEREFORE, Employer and Employee agree to amend the Employment
Agreement as provided in this Second Amendment:
1. Amendments to Employment Agreement.
(a) Section 3(b)(ii) of the Employment Agreement is hereby
deleted and the following Section 3(b)(ii) is substituted therefor:
(ii) For purposes of determining the Cash Bonus, if
any, payable to Employee on account of Employer's 1996 fiscal
year, Employee and Employer acknowledge and agree that
Employee's 1996 base compensation will be deemed for purposes
of the Cash Bonus to equal $175,000 comparison EBITDA equals
$7,600,00 and the maximum Cash Bonus payable to Employee on
account of Employer's 1996 fiscal year equals $105,000.
(b) Section 3(c) of the Employment Agreement is hereby amended
by deleting the date "March 31, 1997" and substituting the date "April
30, 1997" therefor.
(c) Section 3(c) of the Employment Agreement is hereby further
amended by adding the following language to the end of said Section
3(c):
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122
Notwithstanding the provisions of Section 3(b)(iv) of this
Agreement, in the event that Employee shall be entitled to the
payment of a Cash Bonus on account of Employer's 1996 fiscal
year, then, in such event, on or before April 30, 1997
Employee may furnish Employer with his written election to
receive shares of Common Stock having a fair market value
(such fair market value to be determined in the same manner as
shares of Common Stock issuable to the Trustee for the benefit
of Employee on account of Employee's Stock Bonus for
Employer's 1996 fiscal year) in an amount specified by
Employee in such written election in lieu of such Cash Bonus.
Employee may make such an election only on account of
Employer's 1996 fiscal year. Any shares of Common Stock so
issued to the Trustee for the benefit of Employee on account
of such written election will, in turn, qualify under this
Section 3(c) as shares of Common Stock purchased by Employee
and, accordingly, the Trustee will be entitled to receive one
share of Matching Stock on account of each share of Common
Stock issued to Trustee for the benefit of Employee in lieu of
Employee's Cash Bonus in accordance with the provisions of
this Section 3(c).
2. Miscellaneous.
(a) Effect of Amendment. Except as specifically provided
herein, this Second Amendment does not in any way waive, amend, modify,
affect or impair the terms and conditions of the Employment Agreement,
and all terms and conditions of the Employment Agreement are to remain
in full force and effect unless otherwise specifically amended, waived
or changed pursuant hereto.
On and after the date of this Second Amendment, each reference
in the Employment Agreement to "this Agreement", "hereunder", "hereof",
"herein" or words of like import referring to the Employment Agreement
shall mean and be a reference to the Employment Agreement as heretofore
amended and as further amended by this Second Amendment.
This Second Amendment constitutes the entire agreement among
the parties pertaining to the subject matter hereof and supersedes all
prior and contemporaneous agreements, understandings, representations
or other arrangements, whether express or implied, written or oral, of
the parties in connection therewith except to the extent expressly
incorporated or specifically referred to herein.
(b) Counterparts. This Second Amendment may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute
but one and the same instrument.
2
<PAGE>
123
(c) Governing Law. This Second Amendment shall be governed by,
and shall be construed and enforced in accordance with, the internal
laws of the State of Ohio, without regard to conflicts of laws
principles.
IN WITNESS WHEREOF, Employer and Employee have signed this Second
Amendment so as of the date hereinabove provided.
CARDINAL REALTY SERVICES, INC.
Attest:
By: /s/ John B. Bartling, Jr.
--------------------------------
John B. Bartling, Jr.
President and
Chief Executive Officer
/s/ Mark D. Thompson
---------------------------------
MARK D. THOMPSON
3
124
THIRD AMENDMENT TO EMPLOYMENT AGREEMENT
---------------------------------------
This Third Amendment to Employment Agreement (this "Third Amendment")
is entered into as of January 1, 1997 by and between Mark D. Thompson
("Employee") and Cardinal Realty Services, Inc., an Ohio corporation
("Employer").
RECITALS:
---------
A. Employee and Employer are a party to that certain Employment
Agreement dated as of April 1, 1996, as amended by that certain Amendment to
Employment and Award Agreements dated as of April 18, 1996 and the Second
Amendment to the Employment Agreement dated as of December 20, 1996 (as so
amended, the "Employment Agreement").
B. Terms which are used but not otherwise defined in this Third
Amendment have the meanings given them in the Employment Agreement (including,
without limitation, terms defined in prior Amendments to the Employment
Agreement). The Employer desires to extend the term of the Employment Agreement,
to increase the Base Compensation of Employee for the 1997 fiscal year, to
permit the payment of a portion of the Base Compensation of the Employee for the
1997 fiscal year in shares of Common Stock and to allow the Company to pay a
portion of the Cash Bonus for the 1996 fiscal year in shares of Common Stock.
NOW THEREFORE, Employer and Employee agree to amend the Employment
Agreement as provided in this Third Amendment:
1. Amendments to Employment Agreement.
(a) Section 2(a) of the Employment Agreement is hereby amended
by adding the following sentence after the first sentence:
The Employment Agreement is renewed for an additional
term commencing April 1, 1997 and shall continue
through March 31, 1998 (the "First Renewal Term").
(b) Section 3(a) of the Employment Agreement is hereby amended
by adding the following provisions to the end of said Section 3(a):
(iv) Effective as of January 1, 1997, and thereafter
during the First Renewal Term and any extension(s)
thereof, Employee's Base Compensation shall equal Two
Hundred and Thirty Thousand Dollars ($230,000).
(v) The Base Compensation paid to Employee on account of
the 1997 fiscal (calendar) year shall be paid as
follows:
(A) Two Hundred Thousand Dollars ($200,000) in
cash, and
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125
(B) Thirty Thousand Dollars ($30,000) in shares
of common stock of the Employer valued at
$20.625 per share (or shares),
in equal bi-monthly installments of cash and quarterly
installments of shares of Common Stock of the Employer.
(c) Section 3(b) of the Employment Agreement is hereby further
amended by adding the following language at the end of Section 3(c):
(v) Notwithstanding the provisions of Section 3(b) of this
Agreement, in the event that Employee shall be entitled to the
payment of a Cash Bonus on account of Employer's 1996 fiscal
year, then, in such event, Employee shall have the option to
elect to receive such Cash Bonus in shares of its Common Stock
based upon a per share price of $20.625, which shares of
Common Stock shall be issued to the Trustee for the benefit of
Employee on account of Employee's Cash Bonus for Employer's
1996 fiscal year.
2. Miscellaneous.
(a) Effect of Amendment. Except as specifically provided
herein, this Third Amendment does not in any way waive, amend, modify,
affect or impair the terms and conditions of the Employment Agreement,
and all terms and conditions of the Employment Agreement are to remain
in full force and effect unless otherwise specifically amended, waived
or changed pursuant hereto.
On and after the date of this Third Amendment, each reference
in the Employment Agreement to "this Agreement", "hereunder", "hereof",
"herein" or words of like import referring to the Employment Agreement
shall mean and be a reference to the Employment Agreement as heretofore
amended and as further amended by this Third Amendment.
This Third Amendment constitutes the entire agreement among
the parties pertaining to the subject matter hereof and supersedes all
prior and contemporaneous agreements, understandings, representations
or other arrangements, whether express or implied, written or oral, of
the parties in connection therewith except to the extent expressly
incorporated or specifically referred to herein.
(b) Counterparts. This Third Amendment may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute
but one and the same instrument.
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<PAGE>
126
(c) Governing Law. This Third Amendment shall be governed by,
and shall be construed and enforced in accordance with, the internal
laws of the State of Ohio, without regard to conflicts of laws
principles.
IN WITNESS WHEREOF, Employer and Employee have signed this Third
Amendment so as of the date hereinabove provided.
CARDINAL REALTY SERVICES, INC.
Attest:
By: /s/ John B. Bartling, Jr.
- ------------------------- ----------------------------------------
John B. Bartling, Jr.,President and
- ------------------------- Chief Financial Officer
- ------------------------- /s/ Mark D. Thompson
----------------------------------------
MARK D. THOMPSON
- -------------------------
3
127
EMPLOYMENT AGREEMENT
BETWEEN CARDINAL REALTY SERVICES, INC.
AND
PAUL R. SELID
<PAGE>
128
TABLE OF CONTENTS
Page
1. Employment................................................................1
2. Term and Positions........................................................1
3. Compensation..............................................................2
4. Insurance and Other Benefits..............................................8
5. Payment in the Event of Death or Permanent Disability.....................8
6. Termination and Further Compensation......................................9
7. Reimbursement............................................................11
8. Covenants and Confidential Information...................................11
9. Withholding Taxes........................................................12
10. No Conflicting Agreement.................................................13
11. Severable Provisions.....................................................13
12. Binding Agreement........................................................13
13. Arbitration..............................................................13
14. Notices..................................................................13
15. Waiver...................................................................13
16. Miscellaneous............................................................14
17. Governing Law............................................................14
18. Captions and Section Headings............................................14
19. Miscellaneous............................................................14
<PAGE>
129
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into as of the 15th
day of April, 1996, between Cardinal Realty Services, Inc., an Ohio corporation
("Employer"), and Paul R. Selid ("Employee").
WITNESSETH:
WHEREAS, Employer and Employee desire to enter into this Agreement to
assure Employer of the services of Employee, and Employee's employment for the
term set forth herein, and to set forth the rights and duties of the parties
hereto.
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties agree as follows:
1. Employment.
(a) Employer hereby employs Employee, and Employee hereby
accepts such employment, upon the terms and conditions hereinafter set
forth.
(b) During the term of this Agreement, or any renewal or
extension hereof (for purposes hereof, all references herein to the
term of this Agreement shall be deemed to include references to the
period of renewal or extension hereof, if any), Employee shall devote
his full time to his employment and perform with reasonable diligence
such duties as are customarily performed by the Senior Vice President
and Manager of Advisory Services or similar senior executive officer of
a company having the size and structure of Employer and its
subsidiaries, together with such other duties as may be reasonably
requested from time to time by the Board of Directors of Employer (the
"Board"), which duties shall be consistent with the further covenants
set forth in Section 2 of this Agreement.
(c) Employee shall not, without the prior written consent of
Employer, directly or indirectly, during the term of this Employment
Agreement, other than in the performance of duties naturally inherent
in the businesses of Employer or any subsidiary of Employer and in
furtherance thereof, render services of a business, professional or
commercial nature to any other person or firm, for compensation. For
purposes of this Agreement, all references herein to subsidiaries and
affiliates of Employer shall be deemed to include subsidiaries and
affiliates now or hereafter existing.
2. Term and Positions.
(a) Subject to the provisions for termination as hereinafter
provided, the term of this Agreement shall begin on April 15, 1996 and
shall continue through April 14, 1997 (the "Original Term"). The
Original Term may be extended for additional terms of one year each
(each, a "Renewal Term") upon the mutual agreement of Employer and
Employee.
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130
(b) Employee shall, without any compensation in addition to
that which is specifically provided in this Agreement, serve as Senior
Vice President and Manager of Advisory Services of Employer and in such
other offices or positions with any subsidiary or affiliate of Employer
as shall, from time to time, be assigned reasonably by the Board (but
such office or positions shall be consistent with the duties, offices
or positions hereinbefore named). It is agreed that in addition to the
provisions of Section 4(e) of this Agreement and any other obligations
due him hereunder, Employee shall be entitled to the protection of the
applicable indemnification provisions of the Articles of Incorporation
and Code of Regulations of Employer and the corporate or partnership
organizational documents of any such subsidiary or affiliate. Employer
will use all commercially reasonable efforts to maintain its directors
and officers liability insurance for the benefit of, among others,
Employee. For purposes of this Agreement, the term: (i) "affiliate,"
when used with reference to Employer, means any entity which, directly
or indirectly through one or more intermediaries, is controlled by,
under common control with, or which controls, Employer; (ii) "control"
means (A) the power to direct the management and policies of the entity
in question, directly or indirectly, whether through ownership of
voting securities, by contract or otherwise and (B) "controlled" and
"controlling" have meanings correlative to the foregoing; and (iii)
"subsidiary" means, with reference to Employer, any corporation,
general or limited partnership, limited liability company, association
or other business entity (A) of which securities or other ownership
interests representing more than 50% of the equity or more than 50% of
the ordinary voting power or more than 50% of the general partners
interests are, at the time any determination is being made, owned,
controlled or held by Employer or (B) that, at the time any
determination is being made, is otherwise controlled, by Employer or
one or more subsidiaries of Employer or by Employer and one or more
subsidiaries of Employer.
3. Compensation.
(a) For all services he may render to Employer (and any
subsidiary or affiliate) during the term of this Agreement, Employer
shall pay to Employee base compensation ("Base Compensation") on the
following terms:
(i) For the Original Term and any Renewal Term, One
Hundred and Twenty-Five Thousand Dollars ($125,000) per annum.
(ii) Base Compensation payable to Employee under this
Section 3(a) shall be payable in equal bi-weekly installments.
(iii) Commencing January 1, 1997, Base Compensation
may be increased each fiscal year upon appropriate action by
the Board. If increased, such increased dollar amount shall
thereafter constitute "Base Compensation" for all purposes
under this Agreement.
(b) Employer shall pay to Employee bonus compensation during
the term of this Agreement as follows:
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131
(i) For Employer's 1997 fiscal year, and for each
fiscal year thereafter during which this Employment Agreement
remains in effect, Employer will pay to Employee a cash bonus
(the "Cash Bonus") determined on the basis of Employer's
aggregate return on equity ("ROE" as defined in Exhibit "A-1"
attached hereto and incorporated herein) from investments in
real estate (including interests comprised of receivables) as
follows:
Cash Bonus Expressed as
Percentage of Base
ROE Compensation
-------------------------------- --------------------------
up to 5% 0
greater than 5% up to 10% ROE multiplied by 1.0;
plus, if applicable
----
greater than 10% up to 15% ROE exceeding 10%
multiplied by
1.5; plus, if applicable
----
greater than 15% up to 20% ROE exceeding 15%
multiplied by
2.5; plus, if applicable
----
greater than 20% to 25% ROE exceeding 20%
multiplied by
3.0; plus, if applicable
----
greater than 25% ROE exceeding 25%
multiplied by 4.0, but not
to exceed a total of
60% of Base Compensation
(ii) For purposes of determining the Cash Bonus, if any,
payable to Employee, Employee and Employer acknowledge and
agree that (subject to any increase pursuant to Section
3(a)(iii) of this Agreement) Employee's 1996 Base Compensation
will be deemed (solely for purposes of this Section 3(b) to
equal One Hundred Twenty-Five Thousand Dollars ($125,000), and
the maximum Cash Bonus payable to Employee on account of
Employer's 1996 fiscal year equals Seventy-Five Thousand
Dollars ($75,000).
(iii) Employee's Cash Bonus due under subsections (i) and
(ii) above shall be paid within thirty (30) days after ROE is
calculated from the applicable final audited year end income
statements of Employer.
(iv) In addition to the Cash Bonus, for Employer's 1996
fiscal year, and for each fiscal year thereafter during which
this Employment Agreement remains in effect, Employer shall,
and hereby does, grant to Employee a stock bonus ("Stock
Bonus"; and, together with the Cash Bonus, the "Bonus")
payable in shares of Employer's common stock, without par
value (the "Common Stock"), in accordance
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132
with a Deferred Shares Award Agreement (the "Deferred Shares
Agreement") to be entered into between Employer and Employee
in the form attached hereto as Exhibit A. The dollar amount of
the Stock Bonus will be determined on the same basis as the
Cash Bonus (including the partial-year provision set forth in
Section 5(a), except that the dollar value of the Stock Bonus
as a percentage of Base Compensation will be as follows:
Percentage Increase Dollar Value of Stock
in Employer's ROE Bonus Expressed as Percentage
-------------------- of Base Compensation
-----------------------------
up to 103% 0
greater than 103% up to 105% Equivalent to Percentage
Increase in ROE; plus, if
applicable
greater than 105% up to 110% Additional Percentage
Increase in ROE (above 5%)
multiplied by 2; plus, if
applicable
greater than 110% Additional Percentage
Increase in ROE (above 10%)
multiplied by 3,
but not to exceed 30% of
Base Compensation
(v) The number of shares constituting the Stock Bonus
payable to Employee will be determined by dividing (A) the
dollar value of the Stock Bonus determined in accordance with
the table above by (B) the closing price of Employer's Common
Stock on the Nasdaq National Market System, or if Employer's
Common Stock is not listed or admitted to trading in such
system, the principal securities exchange on which Employer's
Common Stock is listed or admitted to trading on the last
trading date in the period for which the Stock Bonus is
calculated (i.e. December 31, March 31 or the last closing
price for the Common Stock immediately preceding the date
Employee ceases employment with Employer). Any Stock Bonus
which Employee is entitled to receive from Employer shall be
issued on the same date as the Cash Bonus for the same period.
No fractional share shall be payable to Employee in connection
with the Stock Bonus, but Employee will be entitled to a cash
payment equal to the dollar value of any fractional share to
which he would otherwise be entitled under the Stock Bonus, to
be paid together with the payment of the Employee's Cash Bonus
hereunder.
(c) As additional inducement to Employee to enter into this
Agreement, Employer shall issue to The Provident Bank, a state
chartered bank, in its capacity as Trustee under that certain Executive
Deferred Compensation Rabbi Trust Agreement dated as of April 18, 1996
(the "Trust Agreement"), or any successor trustee thereunder
("Trustee"), for
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133
the benefit of Employee, at no additional consideration or cost to
Employee, up to two thousand five hundred (2,500) shares of the Common
Stock for each share of Common Stock of Employer purchased by Employee
from the date of this Agreement through and including April 15, 1997
(the "Matching Stock"). Any Matching Stock which Trustee is entitled to
receive from Employer shall be issued to Trustee within thirty (30)
days of Employee's purchase of any shares of Common Stock and shall be
subject to all restrictions and limitations imposed by applicable state
and federal securities laws and regulations. Notwithstanding the
provisions of Section 3(b)(iv) of this Agreement, in the event that
Employee shall be entitled to the payment of a Cash Bonus on account of
Employer's 1996 fiscal year, then, in such event, on or before April
30, 1997 Employee may furnish Employer with his written election to
receive shares of Common Stock having a fair market value (such fair
market value to be determined in the same manner as shares of Common
Stock issuable to the Trustee for the benefit of the Employee on
account of Employee's Stock Bonus for Employer's 1996 fiscal year) in
an amount specified by Employee in such written election in lieu of
such Cash Bonus. Employee may make such an election only on account of
Employer's 1996 fiscal year. Any shares of Common Stock so issued to
the Trustee for the benefit of Employee on account of such written
election will, in turn, qualify under this Section 3(c) as shares of
Common Stock purchased by Employee and, accordingly, the Trustee will
be entitled to receive one share of Matching Stock on account of each
share of Common Stock issued to Trustee for the benefit of Employee in
lieu of Employee's Cash Bonus in accordance with the provisions of this
Section 3(c).
(d) Further, Employer shall, and hereby does, grant to
Employee rights to receive additional shares of Common Stock subject to
the terms and conditions of those certain Restricted Shares Agreement
(the "Restricted Shares Agreement") to be entered into between Employer
and Employee, in the form attached hereto as Exhibit B (such Common
Stock to be referred to herein as "Restricted Stock") as follows:
(i) nine thousand (9,000) shares of Restricted Stock,
which shall be issued to Trustee on April 15, 1996 and shall
vest as follows (and as more particularly set forth under the
applicable Restricted Shares Agreement):
A. one-third when the number of issued and
outstanding shares of Employer's Common Stock
multiplied by the closing price of Employer's Common
Stock on the Nasdaq National Market System, or if
Employer's Common Stock is not listed or admitted to
trading in such system, the principal securities
exchange or market on which Employer's Common Stock
is listed or admitted to trading, plus the
liquidation value of all issued and outstanding
preferred stock of Employer ("Market
Capitalization"), exceeds Ninety Million Dollars
($90,000,000) for a continuous period over three (3)
consecutive months;
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134
B. one-third when the Market Capitalization
exceeds One Hundred Twenty Million Dollars
($120,000,000) for a continuous period three (3)
consecutive months; and
C. one-third when the Market Capitalization
exceeds One Hundred Fifty Million Dollars
($150,000,000) for a continuous three consecutive
month period.
(ii) Notwithstanding the foregoing, the vesting of all
Restricted Stock and Stock Options (as defined hereinbelow)
granted under this Agreement shall be accelerated in the event
of any of the following:
(A) Employer shall merge or be merged or
consolidated with, another corporation and as a
result of such merger or consolidation less than
seventy percent (70%) of the outstanding voting
securities of the surviving or resulting corporation
shall be owned in the aggregate by the former
shareholders of Employer as the same shall have
existed immediately prior to such merger or
consolidation;
(B) Employer shall sell or transfer to one
or more persons, corporations or entities, in a
single transaction or a series of related
transactions, more than one-half of the assets of
Employer unless by an affirmative vote of two-thirds
of the members of the Board, the transaction or
transactions are exempted from the operation of this
provision based on a good faith finding that the
transaction or transactions are not within the
intended scope of this definition for purposes of
this Agreement;
(C) a person, within the meaning of Section
3(a)(9) or Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended and as in effect on
the date hereof the "Exchange Act"), shall become the
beneficial owner (as defined in Rule 13d-3 of the
Exchange Act) of thirty percent (30%) or more of the
outstanding voting securities of Employer; or
(D) any shareholder of Employer shall
nominate a person to the Board, which nominee shall
be elected to the Board without receiving the prior
endorsement of the Board or its Nominating Committee.
(e) Employer shall grant to Employee options to purchase
twelve thousand five hundred (12,500) shares of Employer's Common Stock
("Stock Options") in accordance with, and subject to, the Employer's
Incentive Equity Plan, as amended, and a Non-Qualified Stock Option
Agreement in the form attached hereto as Exhibit C (the "Option Award
Agreement" and, together with the Deferred Shares Agreement and the
Restricted Shares Agreements, the "Award Agreements"). The Stock
Options shall have an exercise price equal to the closing price of
Employer's Common Stock on the Nasdaq National Market
6
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135
System on April 14, 1996, one-fifth of which shall vest on the first,
second, third, fourth and fifth anniversaries of the date of such
grant, which grant shall be made pursuant to the Option Award
Agreement.
(f) Employee shall be entitled to participate in any pension
or profit- sharing plan covering highly compensated salaried employees
which the Employer may have in effect or hereafter adopt during the
term of this Employment Agreement.
(g) Employer represents and warrants to Employee that unless
Employee makes an election pursuant to Section 83(b) of the Internal
Revenue Code of 1986, as amended (the "Code"), Employee shall not have
any taxable income solely by reason of the grants described in Sections
3(c), (d) and (e) hereof. Employee understands that he will have
taxable income upon the vesting of Restricted Stock, the exercise of
the Stock Options, the disposition of the rights granted in Sections
3(c), (d) and (e) hereof, or other similar event.
(h) If Employee makes an election pursuant to Section 83(b) of
the Code in connection with Restricted Stock acquired by Employee
pursuant to Section 3(d) hereof, Employer shall make a loan to Employee
in an amount equal to forty-eight percent (48%) (subject to appropriate
adjustment if the combined effective federal, state, and local income
tax rate on compensation income changes in 1996) or any subsequent year
in which income may be recognized) of the compensation income
recognized by Employee for federal income tax purposes in connection
with such election. The loan shall (i) bear interest at a rate per
annum equal to that charged from time to time to Employer under
Employer's senior secured credit facility (which credit facility, as of
the date of this Agreement is provided to Employer by The Provident
Bank) plus two percent (2%), (ii) be secured by a pledge of the
Restricted Stock, (iii) be due upon the earliest of three (3) years
from the date of the loan, the sale of the Restricted Stock (to the
extent of the proceeds of such sale with any remaining balance being
thereafter due as originally scheduled), or one (1) year after
Employee's termination of employment with Employer, and (iv) be
evidenced by a promissory note and a pledge agreement in customary form
reasonably acceptable to Employer and Employee.
(i) With respect to the Restricted Stock, if Employee does not
make an election pursuant to Section 83(b) of the Code as described in
Section 3(g) of this Agreement, and with respect to the Stock Options,
upon each occasion Employee recognizes compensation income, as a result
of the vesting of the Restricted Stock or the exercise of the Stock
Options, Employee may borrow from Employer an amount equal to
forty-eight percent (48%) (subject to adjustment as described in
Section 3(h) of this Agreement) of the compensation income so
recognized by Employee, provided that Employee is still employed by
Employer. The loan shall have the same terms and conditions described
in Section 3(h) of this Agreement.
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4. Insurance and Other Benefits.
(a) Employee shall be entitled to such medical,
hospitalization, health, accident, life and disability insurance and
pension plan benefits and such other similar employment privileges and
benefits as are afforded generally from time to time to other executive
officers of Employer, or subsidiaries of Employer, and in no event
shall Employee be provided benefits at a level less generous than those
benefits provided to any other officer or employee of Employer, or any
subsidiary of Employer. Further, with respect to medical coverage,
Employer shall provide medical coverage for Employee and his dependents
at least equal to the value of coverage afforded Employee on the
effective date of this Agreement if such coverage is available on
commercially reasonable terms.
(b) In connection with the move of Employee's principal
residence to the Columbus, Ohio area, Employer will reimburse Employee
up to Forty-Five Thousand Dollars ($45,000) for typical relocation
expenses, including but not limited to, reasonable temporary living
expenses, including Employee's or Employee's spouse's travel between
Oakton, Virginia and Columbus, Ohio, closing costs on the sale of
Employee's home, and reasonable out-of-pocket costs relating to the
move of furniture, household goods and personal effects from Oakton,
Virginia to Columbus, Ohio. Employee shall bear sole responsibility for
documenting the deductibility of amounts paid pursuant to this
subsection if so required by the Internal Revenue Service, but shall
not be required to provide such documentation to Employer unless
Employer is required to produce same in connection with an audit.
5. Payment in the Event of Death or Permanent Disability.
(a) In the event of Employee's death or Permanent Disability
(as defined hereinbelow) during the term of this Agreement, Employee or
his estate, as the case may be, shall be entitled to receive (i) an
amount equal to (A) the lesser of (x) any remaining Base Compensation
for the Original Term or any then current Renewal Term or (y) one year
of Base Compensation reduced by (B) any and all payments made to
Employee pursuant to any disability insurance policy maintained by
Employer for Employee's benefit pursuant to Section 4(a) of this
Agreement or otherwise (the "Disability Policy"), (ii) a pro rata
portion of the Bonus, if any, applicable to the fiscal year in which
such death or Permanent Disability occurs, as such bonuses are
determined under Section 3(b) of this Agreement, and (iii) any shares
of Restricted Stock and Stock Options that have vested in accordance
with the provisions of the Award Agreements. Such pro rata portion of
the Bonus shall be determined by a multiplying a fraction (the
numerator of which shall be the number of days in the applicable fiscal
year elapsed prior to the date of death or Permanent Disability, as the
case may be, and the denominator of which shall be three hundred
sixty-five (365)) by the amount of the Bonus that would have been
payable, if any, pursuant to such Section 3(b), if Employee had
remained employed under this Agreement for the entire applicable fiscal
year.
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(b) Upon death or Permanent Disability of Employee, the Bonus,
if any, shall be paid when and as provided in Section 3(b) of this
Agreement. The other compensation to be paid pursuant to this Section 5
shall be paid, at the election of Employee or Employee's designated
beneficiary (who shall be his wife, unless he gives Employer written
notice of a different designation), either (i) in two (2) equal annual
installments paid within the two (2) year period beginning on the date
of such death or Permanent Disability, as the case may be, or (ii) in
one (1) lump sum paid within ninety (90) days after the date of such
death or Permanent Disability, as the case may be.
(c) Employee shall be entitled to no further compensation or
other benefits under this Agreement, except as to that portion of any
benefits accrued and earned by him hereunder up to and including the
date of such death or Permanent Disability.
(d) For purposes of this Section 5, Employee's Permanent
Disability shall be deemed to occur on the date after the first to
occur of (i) ninety (90) consecutive days, or (ii) one hundred eighty
(180) days cumulatively in any twelve (12) month period, of Employee's
inability to provide the services required hereunder of him due to
sickness or injury ("Permanent Disability").
6. Termination and Further Compensation.
(a) The employment of Employee under this Agreement, and the
term hereof, subject to Employee's rights set forth elsewhere herein,
may be terminated by Employer:
(i) on death or Permanent Disability of Employee, or
(ii) for cause at any time by action of the Board.
For purposes hereof, the term "cause" shall mean:
A. an intentional act of fraud,
embezzlement, theft or any other material violation
of law in connection with Employee's duties or in the
course of his employment with Employer;
B. intentional wrongful damage to material
assets of Employer;
C. intentional wrongful disclosure of
material confidential information of Employer;
D. intentional wrongful engagement in any
competitive activity which would constitute a
material breach of the duty of loyalty; or
E. breach of any material term of this
Agreement.
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No act, or failure, to act, on the part of Employee shall be
deemed "intentional", or provide the basis for termination for
cause, if it was due primarily to an error in judgment or
negligence without bad faith or reckless disregard, but shall
be deemed "intentional" only if done, or omitted to be done,
by Employee not in good faith and without reasonable belief
that his action or omission was in or not opposed to the best
interest of Employer. Failure to meet performance standards or
objectives of Employer shall not constitute cause for purposes
hereof. Further, in the event Employer terminates Employee for
"cause", Employer shall give Employee written notice as to the
specific circumstances giving rise to its decision to
terminate Employee for cause ("Notice"), and, Employee shall
be given the opportunity to respond, with counsel, to
Employer's decision and Employer's articulated circumstances,
such responses shall be before the Board of Directors of
Employer and shall take place within fourteen (14) days of
Employer's Notice. Any termination by reason of the foregoing
shall not be in limitation of any other right or remedy
Employer may have under this Agreement or otherwise. On any
termination of this Agreement, Employee shall be deemed to
have resigned from all offices and directorships held by
Employee in Employer and any subsidiaries and affiliates of
Employer.
(b) In the event of termination of this Agreement for any of
the reasons set forth in Section 6(a)(ii) hereof, Employee shall be
entitled to no further compensation or other benefits under this
Agreement, except as to (i) that portion of any unpaid Base
Compensation reduced by any and all payments made, or to be made, to
Employee pursuant to the Disability Policy and other benefits accrued
and earned by him hereunder up to and including the effective date of
such termination; and (ii) any of his shares of Restricted Stock and
Stock Options that have vested in accordance with the provisions of
Section 3(c) of this Agreement.
(c) In the event that Employee's employment is terminated
without cause during the Original Term of this Agreement or in the
event that the Original Term of this Agreement shall have expired and
shall not have been renewed and Employee thereupon ceases to be
employed by Employer, Employee shall be entitled to receive: (i) an
amount equal to his Base Compensation, and any other benefits due
Employee under Section 4 of this Agreement, for the nine (9) month
period immediately following such termination; (ii) the Bonus, if any,
applicable to the fiscal year in which such cessation of employment
occurs, as such Bonus is determined under Section 3(b) of this
Agreement but on a prorated basis calculated in the manner contemplated
by Section 5(a) of this Agreement; and (iii) all of his shares of
Restricted Stock awarded pursuant to Section 3(d)(i) of this Agreement
(but not, however, any shares of Restricted Stock awarded pursuant to
Section 3(d)(i) of this Agreement which have not theretofore vested)
and Stock Options immediately fully vested, and otherwise free of any
forfeiture provisions or other restrictions imposed under the Award
Agreements except for any restrictions or limitations imposed by
applicable state and federal securities laws and regulations. In the
event that Employee's employment is terminated without cause during a
Renewal Term, Employee will be entitled to receive all of the
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139
compensation and benefits provided for in the immediately preceding
sentence. Upon any such termination by Employer, other than for
"cause", Employee's obligations to Employer hereunder shall terminate.
7. Reimbursement. Employer shall reimburse Employee or provide him with
an expense allowance during the term of this Agreement, for travel,
entertainment and other expenses reasonably and necessarily incurred by Employee
in performing services hereunder or, generally, the promotion of Employer's
business. Employee shall furnish such documentation with respect to
reimbursement to be paid under this Section 7 as Employer shall reasonably
request.
8. Covenants and Confidential Information.
(a) Employee acknowledges Employer's reliance and expectation
of Employee's continued commitment of performance of his duties and
responsibilities during the term of this Agreement. In light of such
reliance and expectation on the part of Employer, Employee agrees that
during the period beginning on the effective date of this Agreement and
ending eighteen (18) months after the termination of Employee's
employment for cause or Employee's resignation from employment with
Employer, he shall not, directly or indirectly, do or suffer any of the
following:
(i) own, manage, control or participate in the
ownership, management, or control of, or be employed or
engaged by or otherwise affiliated or associated as a
consultant, independent contractor or otherwise with, any
other corporation, partnership, proprietorship, firm,
association, or other business entity, or otherwise engage in
any business, which directly of indirectly acquires, or
solicits to acquire, property management agreements or any
other service agreement directly relating to any property with
respect to which Employer or any of its subsidiaries or
affiliates has contracted to provide (or is actively
negotiating to provide) similar services on the date that
Employee's employment relationship with Employer is terminated
hereunder; provided, however, that the ownership of not more
than one percent (1%) of the stock of any publicly-traded
corporation shall not be deemed a violation of this covenant;
(ii) employ, assist in employing, or solicit for
employment any employee or officer of Employer or any of
Employer's affiliates or subsidiaries who was employed or
retained at any time during the one (1) year period preceding
the date on which Employee's employment with Employer is
terminated;
(iii) induce any person who is an employee or officer
of Employer or any of Employer's affiliates or subsidiaries to
terminate said relationship in such a manner which is not in
furtherance of Employer's interest; or
(iv) except in performing services hereunder,
disclose, divulge, discuss, copy or otherwise use or suffer to
be used in any manner, in competition with, or
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140
contrary to the interests of, Employer or any of Employer's
affiliates or subsidiaries entities, the proprietary customer
lists, limited partner lists, research or data or other trade
secrets of Employer or any of Employer's affiliates or
subsidiaries, it being acknowledged by Employee that any such
proprietary information regarding the business of Employer and
Employer's affiliates or subsidiaries entities compiled or
obtained by, or furnished to, Employee while Employee shall
have been employed by or associated with Employer, and which
has not been publicly disclosed by Employer or which is
otherwise not available in the public domain, is confidential
information and Employer's property.
(b) Employee expressly agrees and understands that the remedy
at law for any breach by him of this Section 8 will be inadequate and
that the damages flowing from such breach are not readily susceptible
to being measured in monetary terms. Accordingly, it is acknowledged
that upon adequate proof of Employee's violation of any legally
enforceable provision of this Section 8, Employer shall be entitled to
immediate injunctive relief and may obtain a temporary order
restraining any threatened or further breach. Nothing in this Section 8
shall be deemed to limit Employer's remedies at law or in equity for
any breach by Employee of any of the provisions of this Section 8 which
may he pursued or availed of by Employer.
(c) Employee has carefully considered the nature and extent of
the restrictions upon him and the rights and remedies conferred upon
Employer under this Section 8, and hereby acknowledges and agrees that
the same are reasonable in time and territory, are designed to
eliminate competition which otherwise would be unfair to Employer, do
not stifle the inherent skill and experience of Employee, would not
operate as a bar to Employee's sole means of support, are fully
required to protect the legitimate interests of Employer and do not
confer a benefit upon Employer disproportionate to the detriment to
Employee.
9. Withholding Taxes. All payments to Employee shall be subject to
withholding on account of federal, state and local taxes as required by law. Any
amounts remitted by Employer to the appropriate taxing authorities as taxes
withheld by Employer from Employee on income realized by Employee with respect
to the vesting of his shares of Restricted Stock shall reduce the amounts
payable by Employer to Employee by way of compensation or otherwise. If any
particular payment required hereunder is insufficient to provide the amount of
such taxes required to be withheld, Employer may withhold such taxes from any
other payment due Employee. In the event all cash payments due Employee are
insufficient to provide the required amount of such withholding taxes, Employee,
within thirty (30) days of written notice from Employer, shall pay to Employer
the amount of such withholding taxes in excess of all cash payments due Employee
at the time such withholding is required to be made by Employer, provided,
however, the foregoing shall not be deemed to limit Employee's right to receive
loans from Employer to fund income tax obligations as set forth in Section 3 of
this Agreement.
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10. No Conflicting Agreement. The parties hereto represent and warrant
to each other that they are not a party to any agreement, contract or
understanding, whether employment or otherwise, which would restrict or would
prohibit them from undertaking or performing in accordance with the terms and
conditions of this Agreement. Employer represents and covenants that its
entering into this Agreement has been duly authorized and ratified, and that it
has full authority to consummate the undertakings set forth herein including,
without limitation, the grant of the Restricted Stock and Stock Options to
Employee.
11. Severable Provisions. The provisions of this Agreement are
severable and if any one or more provisions may be determined to be illegal or
otherwise unenforceable, in whole or in part, the remaining provisions and any
partially unenforceable provision to the extent enforceable in any jurisdiction
shall, nevertheless, be binding and enforceable.
12. Binding Agreement. The rights and obligations of Employer under
this Agreement shall inure to the benefit of, and shall be binding upon,
Employer and its successors and assigns, and the rights and obligations (other
than obligations to perform services) of Employee under this Agreement shall
inure to the benefit of, and shall be binding upon, Employee and his heirs,
personal representatives and estate. Employer agrees and acknowledges that the
services Employee is providing Employer are personal to Employer, and Employer
shall not have the right to assign this Agreement without Employee's written
consent.
13. Arbitration. Any controversy or claim arising out of or relating to
this Agreement, or the breach thereof, shall be settled by arbitration in
accordance with the Rules of the American Arbitration Association then
pertaining in the City of Columbus, Ohio, and judgment upon the award rendered
by the Arbitrator or Arbitrators may be entered in any Court having jurisdiction
thereof. The Arbitrator or Arbitrators shall be deemed to possess the powers to
issue mandatory orders and restraining orders in connection with such
arbitration; provided, however, that nothing in this Section 13 shall be
construed so as to deny Employer the right and power to seek and obtain
injunctive relief in a court of equity for any breach or threatened breach of
Employee of any of his covenants contained in Section 8(a) of this Agreement.
14. Notices. Any notice to be given under this Agreement shall be
personally delivered in writing or shall have been deemed duly given when
received after it is posted in the United States mail, postage prepaid,
registered or certified, return receipt requested, and if mailed to Employer,
shall be addressed to its principal place of business, attention: General
Counsel, and if mailed to Employee, shall be addressed to him at his home
address last known on the records of Employer, or at such other address or
addresses as either Employer or Employee may hereafter designate in writing to
the other.
15. Waiver. The failure of either party to enforce any provision or
provisions of this Agreement shall not in any way be construed as a waiver of
any such provision or provisions as to any future violations thereof, nor
prevent that party thereafter from enforcing each and every other provision of
this Agreement. The rights granted the parties herein are cumulative and the
waiver
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142
of any single remedy shall not constitute a waiver of such party's right to
assert all other legal remedies available to it under the circumstances.
16. Miscellaneous. This Agreement supersedes all prior agreements and
understandings between the parties and may not be modified or terminated orally.
No modification, termination or attempted waiver shall be valid unless in
writing and signed by the party against whom the same it is sought to be
enforced.
17. Governing Law. This Agreement shall be governed by and construed
according to the laws of the State of Ohio.
18. Captions and Section Headings. Captions and section headings used
herein are for convenience and are not a part of this Agreement and shall not be
used in construing it.
19. Miscellaneous. Where necessary or appropriate to the meaning
hereof, the singular and plural shall be deemed to include each other, and the
masculine and neuter shall be deemed to include each other.
IN WITNESS WHEREOF, the parties have executed this Employment Agreement
on the day and year first set forth above.
"EMPLOYER"
ATTEST: CARDINAL REALTY SERVICES, INC.
______________________________ By: John B. Bartling, Jr.
---------------------------------
JOHN B. BARTLING, JR.,
President
______________________________ and Chief Executive
Officer
"EMPLOYEE"
- ------------------------------
Paul R. Selid
------------------------------------
PAUL R. SELID
- ------------------------------
14
143
AMENDED AND RESTATED
RESTRICTED SHARES AGREEMENT (STOCK AWARD)
FOR JOHN BRAM BARTLING, JR.
WHEREAS, John Bram Bartling, Jr. ("Employee") and Cardinal Realty
Services, Inc. ("Company") have heretofore entered into that certain Employment
dated as of December 1, 1995, as amended (as the same may be further amended,
restated, amended and restated, modified, or supplemented from time to time
after the date hereof (and, for purposes of this agreement, irrespective of the
fact that such Employment Agreement may have expired at any time while this
agreement remains in effect), the "Employment Agreement) as well as that certain
Restricted Shares Agreement (Stock Award) dated as of April 15, 1996;
WHEREAS, Company has established its Executive Deferred Compensation
Plan dated as of April 18, 1996 ("Deferred Compensation Plan") and Employee is
entitled to participate in the Deferred Compensation Plan in accordance with its
terms;
WHEREAS, pursuant to the Plan, the Company has further entered into
that certain Executive Deferred Compensation Rabbi Trust Agreement (the "Trust")
with The Provident Bank, a state-chartered bank, as trustee thereunder
("Trustee");
WHEREAS, in accordance with the terms of the Deferred Compensation
Plan, Employee has elected to cause the twenty-two thousand five hundred
(22,500) shares of the Company's common stock, without par value (the "Shares"),
otherwise issuable to him under the terms of the Restricted Shares Agreement
(Stock Award) to be instead issued to the Trustee for Employee's benefit to be
held by the Trustee in accordance with the terms of the Trust;
WHEREAS, as a result of the Employee's election under the Deferred
Compensation Plan, Employee and the Company have agreed to amend and restate the
Restricted Shares Agreement (Stock Agreement) hereby so that the Shares will be
issued to the Trustee for Employee's benefit in accordance with the terms of the
Deferred Compensation Plan (and the Trust) rather than directly to Employee
pursuant to the Company's Amended and Restated 1992 Incentive Equity Plan as
originally contemplated by the Restricted Shares Agreement (Stock Award).
NOW, THEREFORE, pursuant to the Deferred Compensation Plan effective as
of April 15, 1996 (the "Date of Grant"), the Company grants to Trustee for
Employee's benefit under the terms of the Trust, the Shares subject to the
terms, conditions, limitations and restrictions hereinafter set forth. Terms
used herein and not otherwise defined shall have the meanings assigned to them
in the Deferred Compensation Plan.
1. Issuance of Shares. The Shares covered by this agreement are shares
of Other Restricted Stock within the meaning of the Deferred Compensation Plan
and shall be fully paid and nonassessable and shall be represented by a
certificate(s) registered in the name of the Trustee and bearing a legend
referring to the restrictions hereinafter set forth.
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144
2. Restrictions on Transfer of the Shares. The Shares subject to this
agreement may not be transferred, sold, pledged, exchanged, assigned or
otherwise encumbered or disposed of, except to the Company, and shall remain the
sole property of and subject to the Trust until they have become nonforfeitable
in accordance with Section 3 hereof and for so long thereafter as may be
required under the terms of the Deferred Compensation Plan and the Trust. Any
purported transfer, encumbrance or other disposition of the Shares covered by
this agreement that is in violation of this Section 2 shall be null and void,
and the other party to any such purported transaction shall not obtain any
rights to or interest in the Shares covered by this agreement. The Company may
waive the restrictions set forth in this Section 2 (but not in the Deferred
Compensation Plan or the Trust) with respect to all or any portion of the Shares
covered by this agreement.
3. Vesting of the Shares.
(a) One-third of the Shares covered by this agreement, shall
become nonforfeitable on the third, fourth and fifth anniversaries of
the Date of Grant (so that 100% of the Shares will be nonforfeitable on
the fifth anniversary of the Date of Grant), subject to the Employee
remaining in the continuous employ of the Company or a subsidiary
during the applicable vesting period. For the purposes of this
agreement: "subsidiary" shall mean a corporation, partnership, joint
venture, unincorporated association or other entity in which the
Company has a direct or indirect ownership or other equity interest of
more than fifty percent (50%); the continuous employment of the
Employee with the Company or a subsidiary shall not be deemed to have
been interrupted, and the Employee shall not be deemed to have ceased
to be an employee of the Company or a subsidiary, by reason of (i) the
transfer of his employment among the Company and its subsidiaries, (ii)
a leave of absence approved by the Compensation Committee of the
Company's Board of Directors (the "Committee") for illness, military or
governmental service or other reasons; or (iii) absence or inability to
work due to sickness or disability before being deemed Permanently
Disabled and terminated as set forth under the Employment Agreement.
(b) Notwithstanding the vesting provisions of Section 3(a)
hereof, in the event that Employee's employment with the Company
ceases, any Shares not vested will be forfeited.
(c) Notwithstanding the vesting provisions of Sections 3(a)
and (b) hereof, in the event that Employee's employment ceases by
reason of (i) Employee's death, (ii) Employee's Permanent Disability
(as defined in the Employment Agreement) or (iii) the Company's
termination of Employee's employment without "cause" (as defined in the
Employment Agreement) or in the event the Employment Agreement is not
renewed and the Company terminates Employee's employment with the
Company for any reason other than "cause", all of the Shares covered by
this agreement shall become immediately nonforfeitable.
(d) Notwithstanding the vesting provisions of Sections 3(a) ,
(b) and (c) hereof, all of the Shares granted under this Agreement
shall become immediately nonforfeitable if (A)
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145
the Company shall be merged or consolidated with, another corporation
and as a result of such merger or consolidation less than seventy
percent (70%) of the outstanding voting securities of the surviving or
resulting corporation shall be owned in the aggregate by the former
shareholders of the Company as the same shall have existed immediately
prior to such merger or consolidation; (B) the Company shall sell or
transfer to one or more persons, corporations or entities, in a single
transaction or a series of related transactions, more than one-half of
the assets of the Company unless by an affirmative vote of two-thirds
of the members of the Board of Directors of the Company, the
transaction or transactions are exempted from the operation of this
provision based on a good faith finding that the transaction or
transactions are not within the intended scope of this definition for
purposes of this agreement; (C) a person, within the meaning of Section
3(a)(9) or Section 13(d)(3) hereof (as in effect on the date hereof) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
shall become the beneficial owner (as defined in Rule 13d-3 of the
Exchange Act) of thirty percent (30%) or more of the outstanding voting
securities of the Company; or (D) any shareholder of the Company shall
nominate a person to the Board of Directors of the Company (the
"Board"), which nominee shall be elected to the Board without receiving
the prior endorsement of the Board or its Nominating Committee.
4. Forfeiture of the Shares. In the event of a forfeiture, the
certificates representing all of the Shares covered by this agreement that have
not become nonforfeitable in accordance with Section 3 hereof shall be cancelled
and such Shares shall be deemed to be and to have become authorized but unissued
shares of common stock, without par value, of the Company.
5. Dividend, Voting and Other Rights. So long as the Trustee continues
to hold the Shares in accordance with the Trust, all dividend, voting and other
rights will be exercised and enjoyed by the Trustee in accordance with the terms
of the Trust for the benefit of Employee, subject, however, to the terms of
Section 4 and this Section 5. In the event that for any reason prior to vesting
of any of the Shares in accordance with Section 3 above, the Deferred
Compensation Plan and the Trust shall no longer remain effect or the Trustee
shall have otherwise ceased to hold the Shares for Employee's benefit, the
Employee shall, at all times prior to forfeiture, have all of the rights of a
shareholder with respect to the Shares covered by this agreement, including the
right to vote the Shares and receive any dividends that may be paid thereon;
provided, however, that (a) any cash dividends and other cash Distributions that
may be paid on any Shares covered by this agreement that have not become
nonforfeitable in accordance with Section 3 hereof shall be automatically
sequestered and invested in an interest-bearing bank account, which shall be
subject to the same restrictions hereunder as the forfeitable Shares on which
the cash dividends or other cash distributions are paid, and (b) any additional
Shares that the Employee may become entitled to receive pursuant to a share
dividend or a merger or reorganization in which the Company is the surviving
corporation or any other change in the capital structure of the Company shall be
subject to the same restrictions as the Shares covered by this agreement.
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146
6. Retention of Share Certificate(s) by Company. The certificate(s)
representing the Shares covered by this agreement shall be held in custody by
the Company, together with a stock power endorsed in blank by the Trustee with
respect thereto, until those shares have become nonforfeitable in accordance
with Section 3 hereof.
7. Adjustments. The Committee shall make any adjustments in the number
or kind of shares of stock or other securities covered by this agreement that
the Committee, in its discretion, may determine to be equitably required to
prevent any dilution or expansion of the Employee's beneficial rights under this
agreement that otherwise would result from any (a) stock dividend, stock split,
combination of shares, recapitalization or other change in the capital structure
of the Company, (b) merger, consolidation, separation, reorganization or partial
or complete liquidation involving the Company or (c) other transaction or event
having an effect similar to any of those referred to in Section 7(a) or 7(b)
hereof. Furthermore, in the event that any transaction or event described or
referred to in the immediately preceding sentence shall occur, the Committee may
provide in substitution of any or all of the Employee's beneficial rights under
this agreement such alternative consideration as the Committee, in its
discretion, may determine to be equitable under the circumstances.
8. Withholding Taxes. If the Company shall be required to withhold any
federal, state, local or foreign tax in connection with any issuance of
restricted or unrestricted Shares or other securities pursuant to this
agreement, the Employee shall pay the tax or make provisions that are
satisfactory to the Company for the payment thereof.
9. Right to Terminate Employment. No provision of this agreement shall
limit in any way whatsoever any right that the Company or a subsidiary may
otherwise have to terminate the employment of the Employee at any time.
10. Relation to Other Benefits. Any economic or other benefit to the
Employee under this agreement or the Deferred Compensation Plan shall not be
taken into account in determining any benefits to which the Employee may be
entitled under any profit-sharing, retirement or other benefit or compensation
plan maintained by the Company or a subsidiary and shall not affect the amount
of any life insurance coverage available to any beneficiary under any life
insurance plan covering employees of the Company or a subsidiary.
11. Severability. In the event that one or more of the provisions of
this agreement shall be invalidated for any reason by a court of competent
jurisdiction, any provision so invalidated shall be deemed to be separable from
the other provisions hereof and the remaining provisions hereof shall continue
to be valid and fully enforceable.
12. Governing Law. This agreement is made under, and shall be construed
in accordance with, the laws of the State of Ohio.
<PAGE>
147
This agreement is executed by the Company as of the 18th day of April, 1996 so
as to be effective as of the 15th day of April, 1996.
CARDINAL REALTY SERVICES, INC.
By: /s/ Joseph E. Madigan
------------------------------
Joseph E. Madigan
Chairman of the Board
The undersigned, Employee hereby acknowledges receipt of an executed
original of this agreement and accepts the beneficial, deferred right to receive
the Shares or other securities covered hereby, subject to the terms and
conditions of the Deferred Compensation Plan and the terms and conditions
hereinabove set forth.
Employee acknowledges that he has been advised that the Shares covered
by this agreement have not been registered under the Securities Act of 1933 and
agrees that he will not make any disposition of such shares unless either (a)
such Shares have been registered under said Act or (b) an exemption from the
registration provisions of said Act is applicable to the Trustee's or Employee's
proposed disposition of such Shares, as the case may be. Employee understands
that the certificates for such Shares may bear a legend substantially as
follows:
The shares evidenced by this Certificate have not been registered under
the Securities Act of 1933. Such shares may not be sold or otherwise
transferred until the same have been registered under said Act or until
the Company shall have received an opinion of legal counsel or a copy
of a letter from the staff of the Division of Corporation Finance of
the Securities and Exchange Commission, in either case satisfactory to
the Company, that such shares may legally be sold or otherwise
transferred without such registration.
/s/ John Bram Bartling, Jr.
----------------------------------
JOHN BRAM BARTLING, JR.
Date: April 18, 1996
Effective as of April 15, 1996
148
AMENDED AND RESTATED
RESTRICTED SHARES AGREEMENT (MARKET CAP)
FOR JOHN BRAM BARTLING, JR.
WHEREAS, John Bram Bartling, Jr. ("Employee") and Cardinal Realty
Services, Inc. ("Company") have heretofore entered into that certain Employment
Agreement dated as of December 1, 1995, as amended (as the same may be further
amended, restated, amended and restated, modified or supplemented from time to
time from and after the date hereof (and, for purposes of this agreement,
irrespective of the fact that such Employment Agreement may have expired at any
time while this agreement remains in effect), (the "Employment Agreement") as
well as that certain Restricted Shares Agreement (Market Cap) dated as of April
15, 1996;
WHEREAS, Company has established its Executive Deferred Compensation
Plan dated as of April 18, 1996 ("Deferred Compensation Plan") and Employee is
entitled to participate in the Deferred Compensation Plan in accordance with its
terms;
WHEREAS, pursuant to the Plan, the Company has further entered into
that certain Executive Deferred Compensation Rabbi Trust Agreement (the "Trust")
with The Provident Bank, a state-chartered bank, as trustee thereunder
("Trustee");
WHEREAS, in accordance with the terms of the Deferred Compensation
Plan, Employee has elected to cause the twenty thousand (20,000) shares of the
Company's common stock, without par value (the "Shares"), otherwise issuable to
him under the terms of the Restricted Shares Agreement (Market Cap) to be
instead issued to the Trustee for Employee's benefit to be held by the Trustee
in accordance with the terms of the Trust;
WHEREAS, as a result of the Employee's election under the Deferred
Compensation Plan, Employee and the Company have agreed to amend and restate the
Restricted Shares Agreement (Stock Agreement) hereby so that the Shares will be
issued to the Trustee for Employee's benefit in accordance with the terms of the
Deferred Compensation Plan (and the Trust) rather than directly to Employee
pursuant to the Company's Amended and Restated 1992 Incentive Equity Plan as
originally contemplated by the Restricted Shares Agreement (Market Cap).
NOW, THEREFORE, pursuant to the Deferred Compensation Plan effective as
of April 15, 1996 (the "Date of Grant"), the Company grants to Trustee for
Employee's benefit under the terms of the Trust, the Shares subject to the
terms, conditions, limitations and restrictions hereinafter set forth. Terms
used herein and not otherwise defined shall have the meanings assigned to them
in the Deferred Compensation Plan.
1. Issuance of Shares. The Shares covered by this agreement are shares
of Market Capitalization Restricted Stock within the meaning of the Deferred
Compensation Plan and shall be fully paid and nonassessable and shall be
represented by a certificate(s) registered in the name of the Trustee for the
benefit of Employee and bearing a legend referring to the restrictions
hereinafter set forth.
<PAGE>
149
2. Restrictions on Transfer of the Shares. The Shares subject to this
agreement may not be transferred, sold, pledged, exchanged, assigned or
otherwise encumbered or disposed of, except to the Company, and shall remain the
sole property of and subject to the Trust until they have become nonforfeitable
in accordance with Section 3 hereof and for so long thereafter as may be
required under the terms of the Deferred Compensation Plan and the Trust. Any
purported transfer, encumbrance or other disposition of the Shares covered by
this agreement that is in violation of this Section 2 shall be null and void,
and the other party to any such purported transaction shall not obtain any
rights to or interest in the Shares covered by this agreement. The Company may
waive the restrictions set forth in this Section 2 (but not in the Deferred
Compensation Plan or the Trust) with respect to all or any portion of the Shares
covered by this agreement.
3. Vesting of the Shares.
(a) The Shares covered by this agreement, irrespective of the
date originally issued to the Trustee for Employee's benefit, shall
become nonforfeitable as follows:
(i) one-third when the average number of issued and
outstanding shares of the Company's common stock, without par
value ("Common Stock"), over twenty (20) consecutive trading
days multiplied by the average closing price of the Company's
Common Stock on the Nasdaq National Market System over such
period, or if the Company's Common Stock is not listed or
admitted to trading in such system, the principal national
securities exchange or market on which the Company's Common
Stock is listed or admitted to trading, plus the liquidation
value of all issued and outstanding preferred stock of
Employer ("Market Capitalization"), exceeds Ninety Million
Dollars ($90,000,000);
(ii) one-third when the Market Capitalization exceeds
One Hundred Twenty Million Dollars ($120,000,000); and
(iii) one-third when the Market Capitalization
exceeds One Hundred Fifty Million Dollars ($150,000,000) ,
in each case subject to the Employee remaining in the
continuous employ of the Company or a subsidiary during the
applicable period prior to the occurrence of the applicable
event set forth above. For the purposes of this agreement:
"subsidiary" shall mean a corporation, partnership, joint
venture, unincorporated association or other entity in which
the Company has a direct or indirect ownership or other equity
interest of more than fifty percent (50%); the continuous
employment of the Employee with the Company or a subsidiary
shall not be deemed to have been interrupted, and the Employee
shall not be deemed to have ceased to be an employee of the
Company or a subsidiary, by reason of
<PAGE>
150
(i) the transfer of his employment among the Company and its
subsidiaries or (ii) a leave of absence approved by the
Compensation Committee of the Company's Board of Directors
(the "Committee") for illness, military or governmental
service or other reasons.
(b) Notwithstanding the vesting provisions of Section 3(a)
hereof, in the event that Employee's employment with the Company
ceases, any Shares not vested will be forfeited.
(c) Notwithstanding the vesting provisions of Sections 3(a)
and (b) hereof, in the event that Employee's employment ceases by
reason of (i) Employee's death, (ii) Employee's Permanent Disability
(as defined in the Employment Agreement), or (iii) the Company's
termination of Employee's employment without cause all of the Shares
covered by this agreement shall become immediately nonforfeitable.
(d) Notwithstanding the vesting provisions of Sections 3(a),
(b) and (c) hereof, all of the Shares granted under this Agreement
shall become immediately nonforfeitable in the event of the following:
(i) the Market Capitalization exceeds One Hundred
Fifty Million Dollars ($150,000,000); or
(ii) if (A) the Company shall be merged or
consolidated with, another corporation and as a result of such
merger or consolidation less than seventy percent (70%) of the
outstanding voting securities of the surviving or resulting
corporation shall be owned in the aggregate by the former
shareholders of the Company as the same shall have existed
immediately prior to such merger or consolidation; (B) the
Company shall sell or transfer to one or more persons,
corporations or entities, in a single transaction or a series
of related transactions, more than one-half of the assets of
the Company unless by an affirmative vote of two-thirds of the
members of the Board of Directors of the Company, the
transaction or transactions are exempted from the operation of
this provision based on a good faith finding that the
transaction or transactions are not within the intended scope
of this definition for purposes of this agreement; (C) a
person, within the meaning of Section 3(a)(9) or Section
13(d)(3) hereof(as in effect on the date hereof) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"), shall become the beneficial owner (as defined in Rule
13d-3 of the Exchange Act) of thirty percent (30%) or more of
the outstanding voting securities of the Company; or (D) any
shareholder of the Company shall nominate a person to the
Board of Directors of the Company (the "Board"), which nominee
shall be elected to the Board without receiving the prior
endorsement of the Board or its Nominating Committee.
4. Forfeiture of the Shares. In the event of a forfeiture, the
certificates representing all of the Shares covered by this agreement that have
not become nonforfeitable in
<PAGE>
151
accordance with Section 3 hereof shall be cancelled and such Shares shall be
deemed to be and to have become authorized but unissued shares of common stock,
without par value, of the Company.
5. Dividend, Voting and Other Rights. So long as the Trustee continues
to hold the Shares in accordance with the Trust, all dividend, voting and other
rights will be exercised and enjoyed by the Trustee in accordance with the terms
of the Trust for the benefit of Employee, subject, however, to the terms of
Section 4 and this Section 5. In the event that for any reason prior to vesting
of any of the Shares in accordance with Section 3 above, the Deferred
Compensation Plan and the Trust shall no longer remain in effect or the Trustee
shall have otherwise ceased to hold the Shares for Employee's benefit, the
Employee shall, at all times prior to forfeiture, have all of the rights of a
shareholder with respect to the Shares covered by this agreement, including the
right to vote the Shares and receive any dividends that may be paid thereon;
provided, however, that (a) any cash dividends and other cash distributions that
may be paid on any Shares covered by this agreement that have not become
nonforfeitable in accordance with Section 3 hereof shall be automatically
sequestered and invested in an interest-bearing bank account, which shall be
subject to the same restrictions hereunder as the forfeitable Shares on which
the cash dividends or other cash distributions are paid, and (b) any additional
Shares that the Employee may become entitled to receive pursuant to a share
dividend or a merger or reorganization in which the Company is the surviving
corporation or any other change in the capital structure of the Company shall be
subject to the same restrictions as the Shares covered by this agreement.
6. Retention of Share Certificate(s) by Company. The certificate(s)
representing the Shares covered by this agreement shall be held in custody by
the Company, together with a stock power endorsed in blank by the Trustee with
respect thereto, until those Shares have become nonforfeitable in accordance
with Section 3 hereof.
7. Adjustments. The Committee shall make any adjustments in the number
or kind of shares of stock or other securities covered by this agreement that
the Committee, in its discretion, may determine to be equitably required to
prevent any dilution or expansion of the Employee's rights under this agreement
that otherwise would result from any (a) stock dividend, stock split,
combination of shares, recapitalization or other change in the capital structure
of the Company, (b) merger, consolidation, separation, reorganization or partial
or complete liquidation involving the Company or (c) other transaction or event
having an effect similar to any of those referred to in Section 7(a) or 7(b)
hereof. Furthermore, in the event that any transaction or event described or
referred to in the immediately preceding sentence shall occur, the Committee may
provide in substitution of any or all of the Employee's beneficial rights under
this agreement such alternative consideration as the Committee, in its
discretion, may determine to be equitable under the circumstances.
8. Withholding Taxes. If the Company shall be required to withhold any
federal, state, local or foreign tax in connection with any issuance of
restricted or unrestricted Shares or other securities pursuant to this
agreement, the Employee shall pay the tax or make provisions that are
satisfactory to the Company for the payment thereof.
<PAGE>
152
9. Right to Terminate Employment. No provision of this agreement shall
limit in any way whatsoever any right that the Company or a subsidiary may
otherwise have to terminate the employment of the Employee at any time.
10. Relation to Other Benefits. Any economic or other benefit to the
Employee under this agreement or the Deferred Compensation Plan shall not be
taken into account in determining any benefits to which the Employee may be
entitled under any profit-sharing, retirement or other benefit or compensation
plan maintained by the Company or a subsidiary and shall not affect the amount
of any life insurance coverage available to any beneficiary under any life
insurance plan covering employees of the Company or a subsidiary.
11. Severability. In the event that one or more of the provisions of
this agreement shall be invalidated for any reason by a court of competent
jurisdiction, any provision so invalidated shall be deemed to be separable from
the other provisions hereof, and the remaining provisions hereof shall continue
to be valid and fully enforceable.
12. Governing Law. This agreement is made under, and shall be construed
in accordance with, the laws of the State of Ohio.
This agreement is executed by the Company as of the 18th day of April,
1996, so as to be effective as of the 15th day of April, 1996.
CARDINAL REALTY SERVICES, INC.
By: /s/ Joseph E. Madigan
-------------------------
Joseph E. Madigan
Chairman of the Board
The undersigned Employee hereby acknowledges receipt of an executed
original of this agreement and accepts the beneficial, deferred right to receive
the Shares or other securities covered hereby, subject to the terms and
conditions of the Deferred Compensation Plan, the Trust and the terms and
conditions hereinabove set forth.
Employee acknowledges that he has been advised that the Shares covered
by this agreement have not been registered under the Securities Act of 1933, as
amended, and agrees that he will not make any disposition of such Shares unless
either (a) such Shares have been registered under said Act or (b) an exemption
from the registration provisions of said Act is applicable to the Trustee's or
Employee's proposed disposition of such Shares, as the case may be. Employee
understands that the certificates for such Shares may bear a legend
substantially as follows:
<PAGE>
153
The shares evidenced by this Certificate have not been registered
under the Securities Act of 1933, as amended. Such shares may not be
sold or otherwise transferred until the same have been registered
under said Act or until the Company shall have received an opinion of
legal counsel or a copy of a letter from the staff of the Division of
Corporation Finance of the Securities and Exchange Commission, in
either case satisfactory to the Company, that such shares may legally
be sold or otherwise transferred without such registration.
/s/ John Bram Bartling, Jr.
-----------------------------------
JOHN BRAM BARTLING, JR.
Date: April 18, 1996
Effective as of April 15, 1996
154
AMENDED AND RESTATED
RESTRICTED SHARES AGREEMENT (STOCK AWARD)
FOR MARK D. THOMPSON
WHEREAS, Mark D. Thompson ("Employee") and Cardinal Realty Services,
Inc. ("Company") have heretofore entered into that certain Employment dated as
of April 1, 1996, as amended (as the same may be further amended, restated,
amended and restated, modified, or supplemented from time to time after the date
hereof (and, for purposes of this agreement, irrespective of the fact that such
Employment Agreement may have expired at any time while this agreement remains
in effect), the "Employment Agreement) as well as that certain Restricted Shares
Agreement (Stock Award) dated as of April 15, 1996;
WHEREAS, Company has established its Executive Deferred Compensation
Plan dated as of April 18, 1996 ("Deferred Compensation Plan") and Employee is
entitled to participate in the Deferred Compensation Plan in accordance with its
terms;
WHEREAS, pursuant to the Plan, the Company has further entered into
that certain Executive Deferred Compensation Rabbi Trust Agreement (the "Trust")
with The Provident Bank, a state-chartered bank, as trustee thereunder
("Trustee");
WHEREAS, in accordance with the terms of the Deferred Compensation
Plan, Employee has elected to cause the seven thousand five hundred (7,500)
shares of the Company's common stock, without par value (the "Shares"),
otherwise issuable to him under the terms of the Restricted Shares Agreement
(Stock Award) to be instead issued to the Trustee for Employee's benefit to be
held by the Trustee in accordance with the terms of the Trust;
WHEREAS, as a result of the Employee's election under the Deferred
Compensation Plan, Employee and the Company have agreed to amend and restate the
Restricted Shares Agreement (Stock Agreement) hereby so that the Shares will be
issued to the Trustee for Employee's benefit in accordance with the terms of the
Deferred Compensation Plan (and the Trust) rather than directly to Employee
pursuant to the Company's Amended and Restated 1992 Incentive Equity Plan as
originally contemplated by the Restricted Shares Agreement (Stock Award).
NOW, THEREFORE, pursuant to the Deferred Compensation Plan effective as
of April 15, 1996 (the "Date of Grant"), the Company grants to Trustee for
Employee's benefit under the terms of the Trust, the Shares subject to the
terms, conditions, limitations and restrictions hereinafter set forth. Terms
used herein and not otherwise defined shall have the meanings assigned to them
in the Deferred Compensation Plan.
1. Issuance of Shares. The Shares covered by this agreement are shares
of Other Restricted Stock within the meaning of the Deferred Compensation Plan
and shall be fully paid and nonassessable and shall be represented by a
certificate(s) registered in the name of the Trustee and bearing a legend
referring to the restrictions hereinafter set forth.
1
<PAGE>
155
2. Restrictions on Transfer of the Shares. The Shares subject to this
agreement may not be transferred, sold, pledged, exchanged, assigned or
otherwise encumbered or disposed of, except to the Company, and shall remain the
sole property of and subject to the Trust until they have become nonforfeitable
in accordance with Section 3 hereof and for so long thereafter as may be
required under the terms of the Deferred Compensation Plan and the Trust. Any
purported transfer, encumbrance or other disposition of the Shares covered by
this agreement that is in violation of this Section 2 shall be null and void,
and the other party to any such purported transaction shall not obtain any
rights to or interest in the Shares covered by this agreement. The Company may
waive the restrictions set forth in this Section 2 (but not in the Deferred
Compensation Plan or the Trust) with respect to all or any portion of the Shares
covered by this agreement.
3. Vesting of the Shares.
(a) One-third of the Shares covered by this agreement, shall
become nonforfeitable on the third, fourth and fifth anniversaries of
the Date of Grant (so that 100% of the Shares will be nonforfeitable on
the fifth anniversary of the Date of Grant), subject to the Employee
remaining in the continuous employ of the Company or a subsidiary
during the applicable vesting period. For the purposes of this
agreement: "subsidiary" shall mean a corporation, partnership, joint
venture, unincorporated association or other entity in which the
Company has a direct or indirect ownership or other equity interest of
more than fifty percent (50%); the continuous employment of the
Employee with the Company or a subsidiary shall not be deemed to have
been interrupted, and the Employee shall not be deemed to have ceased
to be an employee of the Company or a subsidiary, by reason of (i) the
transfer of his employment among the Company and its subsidiaries or
(ii) a leave of absence approved by the Compensation Committee of the
Company's Board of Directors (the "Committee") for illness, military or
governmental service or other reasons.
(b) Notwithstanding the vesting provisions of Section 3(a)
hereof, in the event that Employee's employment with the Company
ceases, any Shares not vested will be forfeited.
(c) Notwithstanding the vesting provisions of Sections 3(a)
and (b) hereof, in the event that Employee's employment ceases by
reason of (i) Employee's death, (ii) Employee's Permanent Disability
(as defined in the Employment Agreement) or (iii) the Company's
termination of Employee's employment without "cause" (as defined in the
Employment Agreement) or in the event the Employment Agreement is not
renewed and the Company terminates Employee's employment with the
Company for any reason other than "cause", all of the Shares covered by
this agreement shall become immediately nonforfeitable.
2
<PAGE>
156
(d) Notwithstanding the vesting provisions of Sections 3(a),
(b) and (c) hereof, all of the Shares granted under this Agreement
shall become immediately nonforfeitable if (A) the Company shall be
merged or consolidated with, another corporation and as a result of
such merger or consolidation less than seventy percent (70%) of the
outstanding voting securities of the surviving or resulting corporation
shall be owned in the aggregate by the former shareholders of the
Company as the same shall have existed immediately prior to such merger
or consolidation; (B) the Company shall sell or transfer to one or more
persons, corporations or entities, in a single transaction or a series
of related transactions, more than one-half of the assets of the
Company unless by an affirmative vote of two-thirds of the members of
the Board of Directors of the Company, the transaction or transactions
are exempted from the operation of this provision based on a good faith
finding that the transaction or transactions are not within the
intended scope of this definition for purposes of this agreement; (C) a
person, within the meaning of Section 3(a)(9) or Section 13(d)(3)
hereof(as in effect on the date hereof) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), shall become the beneficial
owner (as defined in Rule 13d-3 of the Exchange Act) of thirty percent
(30%) or more of the outstanding voting securities of the Company; or
(D) any shareholder of the Company shall nominate a person to the Board
of Directors of the Company (the "Board"), which nominee shall be
elected to the Board without receiving the prior endorsement of the
Board or its Nominating Committee.
4. Forfeiture of the Shares. In the event of a forfeiture, the
certificates representing all of the Shares covered by this agreement that have
not become nonforfeitable in accordance with Section 3 hereof shall be cancelled
and such Shares shall be deemed to be and to have become authorized but unissued
shares of common stock, without par value, of the Company.
5. Dividend, Voting and Other Rights. So long as the Trustee continues
to hold the Shares in accordance with the Trust, all dividend, voting and other
rights will be exercised and enjoyed by the Trustee in accordance with the terms
of the Trust for the benefit of Employee, subject, however, to the terms of
Section 4 and this Section 5. In the event that for any reason prior to vesting
of any of the Shares in accordance with Section 3 above, the Deferred
Compensation Plan and the Trust shall no longer remain effect or the Trustee
shall have otherwise ceased to hold the Shares for Employee's benefit, the
Employee shall, at all times prior to forfeiture, have all of the rights of a
shareholder with respect to the Shares covered by this agreement, including the
right to vote the Shares and receive any dividends that may be paid thereon;
provided, however, that (a) any cash dividends and other cash distributions that
may be paid on any Shares covered by this agreement that have not become
nonforfeitable in accordance with Section 3 hereof shall be automatically
sequestered and invested in an interest-bearing bank account, which shall be
subject to the same restrictions hereunder as the forfeitable Shares on which
the cash dividends or other cash distributions are paid, and (b) any additional
Shares that the Employee may become entitled to receive pursuant to a share
dividend or a merger or reorganization in which the Company is the surviving
corporation or any other change in the
3
<PAGE>
157
capital structure of the Company shall be subject to the same restrictions as
the Shares covered by this agreement.
6. Retention of Share Certificate(s) by Company. The certificate(s)
representing the Shares covered by this agreement shall be held in custody by
the Company, together with a stock power endorsed in blank by the Trustee with
respect thereto, until those shares have become nonforfeitable in accordance
with Section 3 hereof.
7. Adjustments. The Committee shall make any adjustments in the number
or kind of shares of stock or other securities covered by this agreement that
the Committee, in its discretion, may determine to be equitably required to
prevent any dilution or expansion of the Employee's beneficial rights under this
agreement that otherwise would result from any (a) stock dividend, stock split,
combination of shares, recapitalization or other change in the capital structure
of the Company, (b) merger, consolidation, separation, reorganization or partial
or complete liquidation involving the Company or (c) other transaction or event
having an effect similar to any of those referred to in Section 7(a) or 7(b)
hereof. Furthermore, in the event that any transaction or event described or
referred to in the immediately preceding sentence shall occur, the Committee may
provide in substitution of any or all of the Employee's beneficial rights under
this agreement such alternative consideration as the Committee, in its
discretion, may determine to be equitable under the circumstances.
8. Withholding Taxes. If the Company shall be required to withhold any
federal, state, local or foreign tax in connection with any issuance of
restricted or unrestricted Shares or other securities pursuant to this
agreement, the Employee shall pay the tax or make provisions that are
satisfactory to the Company for the payment thereof.
9. Right to Terminate Employment. No provision of this agreement shall
limit in any way whatsoever any right that the Company or a subsidiary may
otherwise have to terminate the employment of the Employee at any time.
10. Relation to Other Benefits. Any economic or other benefit to the
Employee under this agreement or the Deferred Compensation Plan shall not be
taken into account in determining any benefits to which the Employee may be
entitled under any profit-sharing, retirement or other benefit or compensation
plan maintained by the Company or a subsidiary and shall not affect the amount
of any life insurance coverage available to any beneficiary under any life
insurance plan covering employees of the Company or a subsidiary.
11. Severability. In the event that one or more of the provisions of
this agreement shall be invalidated for any reason by a court of competent
jurisdiction, any provision so invalidated shall be deemed to be separable from
the other provisions hereof, and the remaining provisions hereof shall continue
to be valid and fully enforceable.
4
<PAGE>
158
12. Governing Law. This agreement is made under, and shall be construed
in accordance with, the laws of the State of Ohio.
This agreement is executed by the Company as of the 18th day of April,
1996 so as to be effective as of the 15th day of April, 1996.
CARDINAL REALTY SERVICES, INC.
By: /s/ John B. Bartling, Jr.
------------------------------------------
John B. Bartling, Jr.,
President and Chief Executive Officer
The undersigned Employee hereby acknowledges receipt of an executed
original of this agreement and accepts the beneficial, deferred right to receive
the Shares or other securities covered hereby, subject to the terms and
conditions of the Deferred Compensation Plan and the terms and conditions
hereinabove set forth.
Employee acknowledges that he has been advised that the Shares covered
by this agreement have not been registered under the Securities Act of 1933 and
agrees that he will not make any disposition of such shares unless either (a)
such Shares have been registered under said Act or (b) an exemption from the
registration provisions of said Act is applicable to the Trustee's or Employee's
proposed disposition of such Shares, as the case may be. Employee understands
that the certificates for such Shares may bear a legend substantially as
follows:
The shares evidenced by this Certificate have not been registered under
the Securities Act of 1933. Such shares may not be sold or otherwise
transferred until the same have been registered under said Act or until
the Company shall have received an opinion of legal counsel or a copy
of a letter from the staff of the Division of Corporation Finance of
the Securities and Exchange Commission, in either case satisfactory to
the Company, that such shares may legally be sold or otherwise
transferred without such registration.
/s/ Mark D. Thompson
-----------------------------------
MARK D. THOMPSON
Date: April 18, 1996
Effective as of April 15, 1996
5
159
AMENDED AND RESTATED
RESTRICTED SHARES AGREEMENT (MARKET CAP)
FOR MARK D. THOMPSON
WHEREAS, Mark D. Thompson ("Employee") and Cardinal Realty Services,
Inc. ("Company") have heretofore entered into that certain Employment Agreement
dated as of April 1, 1996, as amended (as the same may be further amended,
restated, amended and restated, modified or supplemented from time to time from
and after the date hereof (and, for purposes of this agreement, irrespective of
the fact that such Employment Agreement may have expired at any time while this
agreement remains in effect), (the "Employment Agreement") as well as that
certain Restricted Shares Agreement (Market Cap) dated as of April 15, 1996;
WHEREAS, Company has established its Executive Deferred Compensation
Plan dated as of April 18, 1996 ("Deferred Compensation Plan") and Employee is
entitled to participate in the Deferred Compensation Plan in accordance with its
terms;
WHEREAS, pursuant to the Plan, the Company has further entered into
that certain Executive Deferred Compensation Rabbi Trust Agreement (the "Trust")
with The Provident Bank, a state-chartered bank, as trustee thereunder
("Trustee");
WHEREAS, in accordance with the terms of the Deferred Compensation
Plan, Employee has elected to cause the nine thousand (9,000) shares of the
Company's common stock, without par value (the "Shares"), otherwise issuable to
him under the terms of the Restricted Shares Agreement (Market Cap) to be
instead issued to the Trustee for Employee's benefit to be held by the Trustee
in accordance with the terms of the Trust;
WHEREAS, as a result of the Employee's election under the Deferred
Compensation Plan, Employee and the Company have agreed to amend and restate the
Restricted Shares Agreement (Stock Agreement) hereby so that the Shares will be
issued to the Trustee for Employee's benefit in accordance with the terms of the
Deferred Compensation Plan (and the Trust) rather than directly to Employee
pursuant to the Company's Amended and Restated 1992 Incentive Equity Plan as
originally contemplated by the Restricted Shares Agreement (Market Cap).
NOW, THEREFORE, pursuant to the Deferred Compensation Plan effective as
of April 15, 1996 (the "Date of Grant"), the Company grants to Trustee for
Employee's benefit under the terms of the Trust, the Shares subject to the
terms, conditions, limitations and restrictions hereinafter set forth. Terms
used herein and not otherwise defined shall have the meanings assigned to them
in the Deferred Compensation Plan.
1. Issuance of Shares. The Shares covered by this agreement are shares
of Market Capitalization Restricted Stock within the meaning of the Deferred
Compensation Plan and shall be fully paid and nonassessable and shall be
represented by a certificate(s) registered in the name of the Trustee for the
benefit of Employee and bearing a legend referring to the restrictions
hereinafter set forth.
<PAGE>
160
2. Restrictions on Transfer of the Shares. The Shares subject to this
agreement may not be transferred, sold, pledged, exchanged, assigned or
otherwise encumbered or disposed of, except to the Company, and shall remain the
sole property of and subject to the Trust until they have become nonforfeitable
in accordance with Section 3 hereof and for so long thereafter as may be
required under the terms of the Deferred Compensation Plan and the Trust. Any
purported transfer, encumbrance or other disposition of the Shares covered by
this agreement that is in violation of this Section 2 shall be null and void,
and the other party to any such purported transaction shall not obtain any
rights to or interest in the Shares covered by this agreement. The Company may
waive the restrictions set forth in this Section 2 (but not in the Deferred
Compensation Plan or the Trust) with respect to all or any portion of the Shares
covered by this agreement.
3. Vesting of the Shares.
(a) The Shares covered by this agreement, irrespective of the
date originally issued to the Trustee for Employee's benefit, shall
become nonforfeitable as follows:
(i) one-third when the number of issued and
outstanding shares of the Company's common stock, without par
value ("Common Stock"), multiplied by the closing price of the
Company's Common Stock on the Nasdaq National Market System
over such period, or if the Company's Common Stock is not
listed or admitted to trading in such system, the principal
national securities exchange or market on which the Company's
Common Stock is listed or admitted to trading, plus the
liquidation value of all issued and outstanding preferred
stock of Employer ("Market Capitalization"), exceeds Ninety
Million Dollars ($90,000,000) for a continuous period over
three consecutive months;
(ii) one-third when the Market Capitalization exceeds
One Hundred Twenty Million Dollars ($120,000,000) for a
continuous period over three consecutive months; and
(iii) one-third when the Market Capitalization
exceeds One Hundred Fifty Million Dollars ($150,000,000) for a
continuous period over three consecutive months,
in each case subject to the Employee remaining in the
continuous employ of the Company or a subsidiary during the
applicable period prior to the occurrence of the applicable
event set forth above. For the purposes of this agreement:
"subsidiary" shall mean a corporation, partnership, joint
venture, unincorporated association or other entity in which
the Company has a direct or indirect ownership or other equity
interest of more than fifty percent (50%); the continuous
employment of the Employee with the Company or a subsidiary
shall not be deemed to have been interrupted, and the Employee
shall not be deemed to have ceased to be an
2
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161
employee of the Company or a subsidiary, by reason of (i) the
transfer of his employment among the Company and its
subsidiaries or (ii) a leave of absence approved by the
Compensation Committee of the Company's Board of Directors
(the "Committee") for illness, military or governmental
service or other reasons.
(b) Notwithstanding the vesting provisions of Section 3(a)
hereof, in the event that Employee's employment with the Company
ceases, any Shares not vested will be forfeited.
(c) Notwithstanding the vesting provisions of Sections 3(a)
and (b) hereof, in the event that Employee's employment ceases by
reason of (i) Employee's death, or (ii) Employee's Permanent
Disability (as defined in the Employment Agreement), all of the Shares
covered by this agreement shall become immediately nonforfeitable.
(d) Notwithstanding the vesting provisions of Sections 3(a),
(b) and (c) hereof, all of the Shares granted under this Agreement
shall become immediately nonforfeitable in the event of the following:
(i) the Market Capitalization exceeds One Hundred
Fifty Million Dollars ($150,000,000) for a continuous period
over three consecutive months; or
(ii) if (A) the Company shall be merged or
consolidated with, another corporation and as a result of such
merger or consolidation less than seventy percent (70%) of the
outstanding voting securities of the surviving or resulting
corporation shall be owned in the aggregate by the former
shareholders of the Company as the same shall have existed
immediately prior to such merger or consolidation; (B) the
Company shall sell or transfer to one or more persons,
corporations or entities, in a single transaction or a series
of related transactions, more than one-half of the assets of
the Company unless by an affirmative vote of two-thirds of the
members of the Board of Directors of the Company, the
transaction or transactions are exempted from the operation of
this provision based on a good faith finding that the
transaction or transactions are not within the intended scope
of this definition for purposes of this agreement; (C) a
person, within the meaning of Section 3(a)(9) or Section
13(d)(3) hereof(as in effect on the date hereof) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"), shall become the beneficial owner (as defined in Rule
13d-3 of the Exchange Act) of thirty percent (30%) or more of
the outstanding voting securities of the Company; or (D) any
shareholder of the Company shall nominate a person to the
Board of Directors of the Company (the "Board"), which nominee
shall be elected to the Board without receiving the prior
endorsement of the Board or its Nominating Committee.
3
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162
4. Forfeiture of the Shares. In the event of a forfeiture, the
certificates representing all of the Shares covered by this agreement that have
not become nonforfeitable in accordance with Section 3 hereof shall be cancelled
and such Shares shall be deemed to be and to have become authorized but unissued
shares of common stock, without par value, of the Company.
5. Dividend, Voting and Other Rights. So long as the Trustee continues
to hold the Shares in accordance with the Trust, all dividend, voting and other
rights will be exercised and enjoyed by the Trustee in accordance with the terms
of the Trust for the benefit of Employee, subject, however, to the terms of
Section 4 and this Section 5. In the event that for any reason prior to vesting
of any of the Shares in accordance with Section 3 above, the Deferred
Compensation Plan and the Trust shall no longer remain in effect or the Trustee
shall have otherwise ceased to hold the Shares for Employee's benefit, the
Employee shall, at all times prior to forfeiture, have all of the rights of a
shareholder with respect to the Shares covered by this agreement, including the
right to vote the Shares and receive any dividends that may be paid thereon;
provided, however, that (a) any cash dividends and other cash distributions that
may be paid on any Shares covered by this agreement that have not become
nonforfeitable in accordance with Section 3 hereof shall be automatically
sequestered and invested in an interest-bearing bank account, which shall be
subject to the same restrictions hereunder as the forfeitable Shares on which
the cash dividends or other cash distributions are paid, and (b) any additional
Shares that the Employee may become entitled to receive pursuant to a share
dividend or a merger or reorganization in which the Company is the surviving
corporation or any other change in the capital structure of the Company shall be
subject to the same restrictions as the Shares covered by this agreement.
6. Retention of Share Certificate(s) by Company. The certificate(s)
representing the Shares covered by this agreement shall be held in custody by
the Company, together with a stock power endorsed in blank by the Trustee with
respect thereto, until those Shares have become nonforfeitable in accordance
with Section 3 hereof.
7. Adjustments. The Committee shall make any adjustments in the number
or kind of shares of stock or other securities covered by this agreement that
the Committee, in its discretion, may determine to be equitably required to
prevent any dilution or expansion of the Employee's rights under this agreement
that otherwise would result from any (a) stock dividend, stock split,
combination of shares, recapitalization or other change in the capital structure
of the Company, (b) merger, consolidation, separation, reorganization or partial
or complete liquidation involving the Company or (c) other transaction or event
having an effect similar to any of those referred to in Section 7(a) or 7(b)
hereof. Furthermore, in the event that any transaction or event described or
referred to in the immediately preceding sentence shall occur, the Committee may
provide in substitution of any or all of the Employee's beneficial rights under
this agreement such alternative consideration as the Committee, in its
discretion, may determine to be equitable under the circumstances.
4
<PAGE>
163
8. Withholding Taxes. If the Company shall be required to withhold any
federal, state, local or foreign tax in connection with any issuance of
restricted or unrestricted Shares or other securities pursuant to this
agreement, the Employee shall pay the tax or make provisions that are
satisfactory to the Company for the payment thereof.
9. Right to Terminate Employment. No provision of this agreement shall
limit in any way whatsoever any right that the Company or a subsidiary may
otherwise have to terminate the employment of the Employee at any time.
10. Relation to Other Benefits. Any economic or other benefit to the
Employee under this agreement or the Deferred Compensation Plan shall not be
taken into account in determining any benefits to which the Employee may be
entitled under any profit-sharing, retirement or other benefit or compensation
plan maintained by the Company or a subsidiary and shall not affect the amount
of any life insurance coverage available to any beneficiary under any life
insurance plan covering employees of the Company or a subsidiary.
11. Severability. In the event that one or more of the provisions of
this agreement shall be invalidated for any reason by a court of competent
jurisdiction, any provision so invalidated shall be deemed to be separable from
the other provisions hereof, and the remaining provisions hereof shall continue
to be valid and fully enforceable.
12. Governing Law. This agreement is made under, and shall be construed
in accordance with, the laws of the State of Ohio.
This agreement is executed by the Company as of the 18th day of April,
1996, so as to be effective as of the 15th day of April, 1996.
CARDINAL REALTY SERVICES, INC.
By: /s/ John B. Bartling, Jr.
-----------------------------
JOHN B. BARTLING, JR., President
and Chief Executive Officer
The undersigned Employee hereby acknowledges receipt of an executed
original of this agreement and accepts the beneficial, deferred right to receive
the Shares or other securities covered hereby, subject to the terms and
conditions of the Deferred Compensation Plan, the Trust and the terms and
conditions hereinabove set forth.
5
<PAGE>
164
Employee acknowledges that he has been advised that the Shares covered
by this agreement have not been registered under the Securities Act of 1933, as
amended, and agrees that he will not make any disposition of such Shares unless
either (a) such Shares have been registered under said Act or (b) an exemption
from the registration provisions of said Act is applicable to the Trustee's or
Employee's proposed disposition of such Shares, as the case may be. Employee
understands that the certificates for such Shares may bear a legend
substantially as follows:
The shares evidenced by this Certificate have not been registered
under the Securities Act of 1933, as amended. Such shares may not be
sold or otherwise transferred until the same have been registered
under said Act or until the Company shall have received an opinion of
legal counsel or a copy of a letter from the staff of the Division of
Corporation Finance of the Securities and Exchange Commission, in
either case satisfactory to the Company, that such shares may legally
be sold or otherwise transferred without such registration.
/s/ Mark D. Thompson
-----------------------------------
MARK D. THOMPSON
Date: April 18, 1996
Effective as of April 15, 1996
6
165
AMENDED AND RESTATED
DEFERRED SHARES AGREEMENT
FOR MARK D. THOMPSON
WHEREAS, Mark D. Thompson ("Employee") and Cardinal Realty Services,
Inc. ("Company") have heretofore entered into that certain Employment Agreement
dated as of April 1, 1996, as amended (as the same may be further amended,
restated, amended and restated, modified or supplemented from time to time from
and after the date hereof (and, for purposes of this agreement, irrespective of
the fact that such Employment Agreement may have expired at any time while this
agreement remains in effect), (the "Employment Agreement") as well as that
certain Deferred Shares Agreement dated as of April 15, 1996;
WHEREAS, Company has established its Executive Deferred Compensation
Plan dated as of April 18, 1996 ("Deferred Compensation Plan") and Employee is
entitled to participate in the Deferred Compensation Plan in accordance with its
terms;
WHEREAS, pursuant to the Plan, the Company has further entered into
that certain Executive Deferred Compensation Rabbi Trust Agreement (the "Trust")
with The Provident Bank, a state-chartered bank, as trustee thereunder
("Trustee");
WHEREAS, in accordance with the terms of the Deferred Compensation
Plan, Employee has elected to cause that number of shares of the Company's
common stock, without par value (the "Shares"), if any, which may otherwise
become issuable to him as the "Stock Bonus" as defined in, and pursuant to the
terms of, Section 3(b), clauses (iv) and (v), of the Employment Agreement and
the Deferred Shares Agreement to be instead issued to the Trustee for Employee's
benefit to be held by the Trustee in accordance with the terms of the Trust;
WHEREAS, as a result of the Employee's election under the Deferred
Compensation Plan, Employee and the Company have agreed to amend and restate the
Deferred Shares Agreement hereby so that the Shares will be issued to the
Trustee for Employee's benefit in accordance with the terms of the Deferred
Compensation Plan (and the Trust) rather than directly to Employee pursuant to
the Company's Amended and Restated 1992 Incentive Equity Plan as originally
contemplated by the Deferred Shares Agreement.
NOW, THEREFORE, pursuant to the Deferred Compensation Plan effective as
of April 15, 1996 (the "Date of Grant"), the Company grants to Trustee for
Employee's benefit under the terms of the Trust, the right to receive the Shares
when and as issuable in accordance with the terms of the Employment Agreement
and this agreement subject to the terms, conditions, limitations and
restrictions hereinafter set forth. Terms used herein and not otherwise defined
shall have the meanings assigned to them in the Deferred Compensation Plan or
the Employment Agreement, as the case may be.
<PAGE>
166
1. Vesting of Awards. The Trustee's right to receive the Shares covered
by this Agreement (any such Shares which are contemplated for future issuance to
Trustee for the benefit of Employee hereunder being hereinafter collectively
referred to as the "Deferred Shares") is conditioned upon the Company's
attainment of EBITDA for its 1996 fiscal year (and any fiscal year thereafter in
which the Employment Agreement remains in effect or in which Employee remains in
the employ of the Company or a subsidiary of the Company) which represents a
positive percentage increase in Comparative EBITDA as follows:
(a)
Dollar Value of
Deferred Shares
EBITDA expressed as Issuable Expressed as
Percentage Percentage of Base
of Comparison EBITDA Compensation
-------------------------- ----------------------
up to 103% 0
greater than 103% up to 105% Equivalent to Percentage
Increase in Comparison
EBITDA; plus, if applicable
greater than 105% up to 110% Additional Percentage Increase
in Comparison EBITDA
multiplied by 2; plus, if
applicable
greater than 110% Additional Percentage Increase
in Comparison EBITDA
multiplied by 3, but not to
exceed 30% of Base
Compensation
(b) The number of Shares issuable to Trustee will be determined by
dividing (A) the dollar value of the Deferred Shares determined in accordance
with the table above by (B) the closing price of the Company's Common Stock on
the Nasdaq National Market System, or if the Company's Common Stock is not
listed or admitted to trading in such system, the principal securities exchange
on which the Common Stock is listed or admitted to trading on the last trading
date in the period for which the dollar value of the Deferred Shares are
calculated (i.e. December 31, March 31 or the last closing price for the Common
Stock immediately preceding the date Employee ceases employment with the
Company). Any Shares which Trustee is entitled to receive from the Company shall
be issued within thirty (30) days after EBITDA is calculated from the applicable
final audited year end income statements of the Company.
-2-
<PAGE>
167
(c) In the event of Employee's death or Permanent Disability (as
defined hereinbelow) during the term of the Employment Agreement, the Trustee,
Employee or his estate, as the case may be (to be determined pursuant to the
provisions of the Deferred Compensation Plan then in effect), shall be entitled
to receive a pro rata portion of the Shares, if any, applicable to the fiscal
year in which such death or Permanent Disability occurs. Such pro rata portion
of the Shares shall be determined by a multiplying a fraction (the numerator of
which shall be the number of days in the applicable fiscal year elapsed prior to
the date of death or Permanent Disability, as the case may be, and the
denominator of which shall be three hundred sixty-five (365)) by the dollar
value, if any, of the Deferred Shares that would have been issuable hereunder if
Employee had remained employed under the Employment Agreement for the entire
applicable fiscal year.
(d) Following such death or Permanent Disability of Employee, the
Shares, if any, shall be issued when and as provided in Section 1(b) of this
Agreement.
(e) For purposes of this Section 1, Employee's Permanent Disability
shall be deemed to occur on the date after the first to occur of (i) ninety (90)
consecutive days, or (ii) one hundred eighty (180) days cumulatively in any
twelve (12) month period, of Employee's inability to provide the services
required hereunder of him due to sickness or injury ("Permanent Disability").
(f) In the event the Company terminates Employee's employment for
"cause" (as defined in the Employment Agreement) Employee shall be entitled to
no further benefits under this Agreement.
(g) In the event that Employee's employment is terminated without cause
during the Original Term or any Renewal Term of the Employment Agreement or in
the event that the Original Term or any Renewal Term of the Employment Agreement
shall have expired and shall not have been renewed and Employee thereupon ceases
to be employed by the Company, the Trustee or Employee, as the case may be (to
be determined pursuant to the provisions of the Deferred Compensation Plan as
then in effect) shall be entitled to receive that number of Shares under this
Agreement, issuable on account of the fiscal year in which such cessation of
employment occurs, as determined under Sections 1(a) and 1(b) of this Agreement,
but on a prorated basis calculated in the manner contemplated by Section 1(c) of
this Agreement and issuable on the date contemplated by Section 1(b) of this
Agreement.
2. Restrictions on Transfer. The right to receive the Shares covered by
this Agreement (in trust under the Trust Agreement or otherwise) may not be
transferred, sold, pledged, exchanged, assigned or otherwise encumbered or
disposed of by the Employee, except as provided under the terms of the Deferred
Compensation Plan and the Trust. Any purported transfer, encumbrance or other
disposition that is in violation of this Section 2 shall be null and void. When
and as permitted by the Deferred Compensation Plan, the Committee may waive the
restrictions set forth in this Section 2 with respect to all or any portion of
the Common Shares covered by this Agreement.
-3-
<PAGE>
168
3. Dividend, Voting and Other Rights. Unless and until thirty (30)
days after Comparison EBITDA is finally determined on account of any fiscal year
of the Company contemplated hereby and the Shares covered by this Agreement are
issued in accordance with the terms of Section 1 of this Agreement, no such
Shares shall be deemed to be issued or outstanding and neither the Trustee nor
the Employee shall have any rights of ownership in such Shares nor shall have
any right to vote them or to receive any dividends or other distributions
thereon. From and after such time as any of the Shares shall have been issued to
the Trustee in accordance with the terms of this Agreement and the Deferred
Compensation Plan and the Trust, the Trustee shall be entitled to such dividend
voting and other rights in respect of such shares as is provided in the Deferred
Compensation Plan and the Trust so long as the Trustee shall continue to hold
such Shares in trust for the benefit of the employee.
4. Adjustments. The Committee shall make any adjustments in the number
or kind of shares of stock or other securities covered by this Agreement that
the Committee may determine to be equitably required to prevent any dilution or
expansion of the Employee's rights under this Agreement that otherwise would
result from any (a) stock dividend, stock split, combination of shares,
recapitalization or other change in the capital structure of the Company, (b)
merger, consolidation, separation, reorganization or partial or complete
liquidation involving the Company or (c) other transaction or event having an
effect similar to any of those referred to in Section 4(a) or 4(b) hereof.
Furthermore, in the event that any transaction or event described or referred to
in the immediately preceding sentence shall occur, the Committee may provide in
substitution of any or all of the Employee's rights under this Agreement such
alternative consideration as the Committee may determine in good faith to be
equitable under the circumstances.
5. Withholding Taxes. If the Company shall be required to withhold any
federal, state, local or foreign tax in connection with any issuance of the
Common Shares or other securities pursuant to this Agreement, the Employee shall
pay the tax or make provisions that are satisfactory to the Company for the
payment thereof.
6. Right to Terminate Employment. No provision of this Agreement shall
limit in any way whatsoever any right that the Company or a subsidiary may
otherwise have to terminate the employment of the Employee at any time.
7. Relation to Other Benefits. Any economic or other benefit to the
Employee under this Agreement or the Plan shall not be taken into account in
determining any benefits to which the Employee may be entitled under any
profit-sharing, retirement or other benefit or compensation plan maintained by
the Company or a subsidiary and shall not affect the amount of any life
insurance coverage available to any beneficiary under any life insurance plan
covering employees of the Company or a subsidiary.
-4-
<PAGE>
169
8. Severability. In the event that one or more of the provisions of
this Agreement shall be invalidated for any reason by a court of competent
jurisdiction, any provision so invalidated shall be deemed to be separable from
the other provisions hereof, and the remaining provisions hereof shall continue
to be valid and fully enforceable.
9. Governing Law. This Agreement is made under, and shall be construed
in accordance with, the laws of the State of Ohio.
This Agreement is executed by the Company as of the 18th day of April,
1996, so as to be effective as of the 15th day of April, 1996.
CARDINAL REALTY SERVICES, INC.
By: /s/ John B. Bartling, Jr.,
---------------------------------------------
John B. Bartling, Jr., President and
Chief Executive Officer
-5-
<PAGE>
170
The undersigned Employee hereby acknowledges receipt of an executed
original of this Agreement and accepts the beneficial, deferred right to receive
the Shares or other securities covered hereby, subject to the terms and
conditions of the Deferred Compensation Plan and the terms and conditions
hereinabove set forth.
Employee acknowledges that he has been advised that the shares of
Shares to be issued pursuant to this Agreement will not have been registered
under the Securities Act of 1933 and agrees that he will not make any
disposition of such shares unless either (a) such shares have been registered
under said Act or (b) an exemption from the registration provisions of said Act
is applicable to the Trustee's or Employee's proposed disposition of such
shares, as the case may be. Employee understands that the certificates for such
shares may bear a legend substantially as follows:
The shares evidenced by this Certificate have not been
registered under the Securities Act of 1933. Such shares may
not be sold or otherwise transferred until the same have
been registered under said Act or until the Company shall
have received an opinion of legal counsel or a copy of a
letter from the staff of the Division of Corporation Finance
of the Securities and Exchange Commission, in either case
satisfactory to the Company, that such shares may legally be
sold or otherwise transferred without such registration.
/s/ Mark D. Thompson
--------------------------------------
Mark D. Thompson
Date: April 18, 1996
Effective as of April 15, 1996
-6-
171
RESTRICTED SHARES AGREEMENT (MARKET CAP)
FOR PAUL R. SELID
WHEREAS, Paul R. Selid ("Employee") and Cardinal Realty Services, Inc.
("Company") have heretofore entered into that certain Employment Agreement dated
as of April 15, 1996 (as the same may be further amended, restated, amended and
restated, modified or supplemented from time to time from and after the date
hereof) (and, for purposes of this agreement, irrespective of the fact that such
Employment Agreement may have expired at any time while this agreement remains
in effect), (the "Employment Agreement");
WHEREAS, Company has established its Executive Deferred Compensation
Plan dated as of April 18, 1996 ("Deferred Compensation Plan") and Employee is
entitled to participate in the Deferred Compensation Plan in accordance with its
terms;
WHEREAS, pursuant to the Plan, the Company has further entered into
that certain Executive Deferred Compensation Rabbi Trust Agreement (the "Trust")
with The Provident Bank, a state-chartered bank, as trustee thereunder
("Trustee");
WHEREAS, in accordance with the terms of the Deferred Compensation
Plan, Employee has elected to cause the nine thousand (9,000) shares of the
Company's common stock, without par value (the "Shares"), otherwise issuable to
him to be instead issued to the Trustee for Employee's benefit to be held by the
Trustee in accordance with the terms of the Trust.
NOW, THEREFORE, pursuant to the Deferred Compensation Plan effective as
of April 15, 1996 (the "Date of Grant"), the Company grants to Trustee for
Employee's benefit under the terms of the Trust, the Shares subject to the
terms, conditions, limitations and restrictions hereinafter set forth. Terms
used herein and not otherwise defined shall have the meanings assigned to them
in the Deferred Compensation Plan.
1. Issuance of Shares. The Shares covered by this agreement are shares
of Market Capitalization Restricted Stock within the meaning of the Deferred
Compensation Plan and shall be fully paid and nonassessable and shall be
represented by a certificate(s) registered in the name of the Trustee for the
benefit of Employee and bearing a legend referring to the restrictions
hereinafter set forth.
2. Restrictions on Transfer of the Shares. The Shares subject to this
agreement may not be transferred, sold, pledged, exchanged, assigned or
otherwise encumbered or disposed of, except to the Company, and shall remain the
sole property of and subject to the Trust until they have become nonforfeitable
in accordance with Section 3 hereof and for so long thereafter as may be
required under the terms of the Deferred Compensation Plan and the Trust. Any
purported transfer, encumbrance or other disposition of the Shares covered by
this agreement that is in violation of this Section 2 shall be null and void,
and the other party to any such purported transaction shall not obtain any
rights to or interest in the Shares covered by this agreement. The Company may
waive the restrictions set forth in this Section 2 (but not in the Deferred
<PAGE>
172
Compensation Plan or the Trust) with respect to all or any portion of the Shares
covered by this agreement.
3. Vesting of the Shares.
(a) The Shares covered by this agreement, irrespective of the
date originally issued to the Trustee for Employee's benefit, shall
become nonforfeitable as follows:
(i) one-third when the number of issued and
outstanding shares of the Company's common stock, without par
value ("Common Stock"), multiplied by the closing price of the
Company's Common Stock on the Nasdaq National Market System
over such period, or if the Company's Common Stock is not
listed or admitted to trading in such system, the principal
national securities exchange or market on which the Company's
Common Stock is listed or admitted to trading, plus the
liquidation value of all issued and outstanding preferred
stock of Employer ("Market Capitalization"), exceeds Ninety
Million Dollars ($90,000,000) for a continuous period over
three consecutive months;
(ii) one-third when the Market Capitalization exceeds
One Hundred Twenty Million Dollars ($120,000,000) for a
continuous period over three consecutive months; and
(iii) one-third when the Market Capitalization exceeds
One Hundred Fifty Million Dollars ($150,000,000) for a
continuous period over three consecutive months,
in each case subject to the Employee remaining in the
continuous employ of the Company or a subsidiary during the
applicable period prior to the occurrence of the applicable
event set forth above. For the purposes of this agreement:
"subsidiary" shall mean a corporation, partnership, joint
venture, unincorporated association or other entity in which
the Company has a direct or indirect ownership or other equity
interest of more than fifty percent (50%); the continuous
employment of the Employee with the Company or a subsidiary
shall not be deemed to have been interrupted, and the Employee
shall not be deemed to have ceased to be an employee of the
Company or a subsidiary, by reason of (i) the transfer of his
employment among the Company and its subsidiaries or (ii) a
leave of absence approved by the Compensation Committee of the
Company's Board of Directors (the "Committee") for illness,
military or governmental service or other reasons.
(b) Notwithstanding the vesting provisions of Section 3(a)
hereof, in the event that Employee's employment with the Company
ceases, any Shares not vested will be forfeited.
2
<PAGE>
173
(c) Notwithstanding the vesting provisions of Sections 3(a)
and (b) hereof, in the event that Employee's employment ceases by
reason of (i) Employee's death, or (ii) Employee's Permanent
Disability (as defined in the Employment Agreement), all of the Shares
covered by this agreement shall become immediately nonforfeitable.
(d) Notwithstanding the vesting provisions of Sections 3(a),
(b) and (c) hereof, all of the Shares granted under this Agreement
shall become immediately nonforfeitable in the event of the following:
(i) the Market Capitalization exceeds One Hundred
Fifty Million Dollars ($150,000,000) for a continuous period
over three consecutive months; or
(ii) if (A) the Company shall be merged or
consolidated with, another corporation and as a result of such
merger or consolidation less than seventy percent (70%) of the
outstanding voting securities of the surviving or resulting
corporation shall be owned in the aggregate by the former
shareholders of the Company as the same shall have existed
immediately prior to such merger or consolidation; (B) the
Company shall sell or transfer to one or more persons,
corporations or entities, in a single transaction or a series
of related transactions, more than one-half of the assets of
the Company unless by an affirmative vote of two-thirds of the
members of the Board of Directors of the Company, the
transaction or transactions are exempted from the operation of
this provision based on a good faith finding that the
transaction or transactions are not within the intended scope
of this definition for purposes of this agreement; (C) a
person, within the meaning of Section 3(a)(9) or Section
13(d)(3) hereof(as in effect on the date hereof) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"), shall become the beneficial owner (as defined in Rule
13d-3 of the Exchange Act) of thirty percent (30%) or more of
the outstanding voting securities of the Company; or (D) any
shareholder of the Company shall nominate a person to the
Board of Directors of the Company (the "Board"), which nominee
shall be elected to the Board without receiving the prior
endorsement of the Board or its Nominating Committee.
4. Forfeiture of the Shares. In the event of a forfeiture, the
certificates representing all of the Shares covered by this agreement that have
not become nonforfeitable in accordance with Section 3 hereof shall be cancelled
and such Shares shall be deemed to be and to have become authorized but unissued
shares of common stock, without par value, of the Company.
5. Dividend, Voting and Other Rights. So long as the Trustee continues
to hold the Shares in accordance with the Trust, all dividend, voting and other
rights will be exercised and enjoyed by the Trustee in accordance with the terms
of the Trust for the benefit of Employee, subject, however, to the terms of
Section 4 and this Section 5. In the event that for any reason prior to vesting
of any of the Shares in accordance with Section 3 above, the Deferred
3
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174
Compensation Plan and the Trust shall no longer remain in effect or the Trustee
shall have otherwise ceased to hold the Shares for Employee's benefit, the
Employee shall, at all times prior to forfeiture, have all of the rights of a
shareholder with respect to the Shares covered by this agreement, including the
right to vote the Shares and receive any dividends that may be paid thereon;
provided, however, that (a) any cash dividends and other cash distributions that
may be paid on any Shares covered by this agreement that have not become
nonforfeitable in accordance with Section 3 hereof shall be automatically
sequestered and invested in an interest-bearing bank account, which shall be
subject to the same restrictions hereunder as the forfeitable Shares on which
the cash dividends or other cash distributions are paid, and (b) any additional
Shares that the Employee may become entitled to receive pursuant to a share
dividend or a merger or reorganization in which the Company is the surviving
corporation or any other change in the capital structure of the Company shall be
subject to the same restrictions as the Shares covered by this agreement.
6. Retention of Share Certificate(s) by Company. The certificate(s)
representing the Shares covered by this agreement shall be held in custody by
the Company, together with a stock power endorsed in blank by the Trustee with
respect thereto, until those Shares have become nonforfeitable in accordance
with Section 3 hereof.
7. Adjustments. The Committee shall make any adjustments in the number
or kind of shares of stock or other securities covered by this agreement that
the Committee, in its discretion, may determine to be equitably required to
prevent any dilution or expansion of the Employee's rights under this agreement
that otherwise would result from any (a) stock dividend, stock split,
combination of shares, recapitalization or other change in the capital structure
of the Company, (b) merger, consolidation, separation, reorganization or partial
or complete liquidation involving the Company or (c) other transaction or event
having an effect similar to any of those referred to in Section 7(a) or 7(b)
hereof. Furthermore, in the event that any transaction or event described or
referred to in the immediately preceding sentence shall occur, the Committee may
provide in substitution of any or all of the Employee's beneficial rights under
this agreement such alternative consideration as the Committee, in its
discretion, may determine to be equitable under the circumstances.
8. Withholding Taxes. If the Company shall be required to withhold any
federal, state, local or foreign tax in connection with any issuance of
restricted or unrestricted Shares or other securities pursuant to this
agreement, the Employee shall pay the tax or make provisions that are
satisfactory to the Company for the payment thereof.
9. Right to Terminate Employment. No provision of this agreement shall
limit in any way whatsoever any right that the Company or a subsidiary may
otherwise have to terminate the employment of the Employee at any time.
10. Relation to Other Benefits. Any economic or other benefit to the
Employee under this agreement or the Deferred Compensation Plan shall not be
taken into account in determining
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175
any benefits to which the Employee may be entitled under any profit-sharing,
retirement or other benefit or compensation plan maintained by the Company or a
subsidiary and shall not affect the amount of any life insurance coverage
available to any beneficiary under any life insurance plan covering employees of
the Company or a subsidiary.
11. Severability. In the event that one or more of the provisions of
this agreement shall be invalidated for any reason by a court of competent
jurisdiction, any provision so invalidated shall be deemed to be separable from
the other provisions hereof, and the remaining provisions hereof shall continue
to be valid and fully enforceable.
12. Governing Law. This agreement is made under, and shall be construed
in accordance with, the laws of the State of Ohio.
This agreement is executed by the Company as of the 15th day of April,
1996.
CARDINAL REALTY SERVICES, INC.
By: /s/ John B. Bartling, Jr.
-------------------------------------
JOHN B. BARTLING, JR., President
and Chief Executive Officer
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176
The undersigned Employee hereby acknowledges receipt of an executed
original of this agreement and accepts the beneficial, deferred right to receive
the Shares or other securities covered hereby, subject to the terms and
conditions of the Deferred Compensation Plan, the Trust and the terms and
conditions hereinabove set forth.
Employee acknowledges that he has been advised that the Shares covered
by this agreement have not been registered under the Securities Act of 1933, as
amended, and agrees that he will not make any disposition of such Shares unless
either (a) such Shares have been registered under said Act or (b) an exemption
from the registration provisions of said Act is applicable to the Trustee's or
Employee's proposed disposition of such Shares, as the case may be. Employee
understands that the certificates for such Shares may bear a legend
substantially as follows:
The shares evidenced by this Certificate have not been registered
under the Securities Act of 1933, as amended. Such shares may not be
sold or otherwise transferred until the same have been registered
under said Act or until the Company shall have received an opinion of
legal counsel or a copy of a letter from the staff of the Division of
Corporation Finance of the Securities and Exchange Commission, in
either case satisfactory to the Company, that such shares may legally
be sold or otherwise transferred without such registration.
/s/ Paul R. Selid
-----------------------------------
PAUL R. SELID
Date: April 15, 1996
6
177
DEFERRED SHARES AGREEMENT
FOR PAUL R. SELID
WHEREAS, Paul R. Selid ("Employee") and Cardinal Realty Services, Inc.
("Company") have heretofore entered into that certain Employment Agreement dated
as of April 15, 1996 (as the same may be further amended, restated, amended and
restated, modified or supplemented from time to time from and after the date
hereof) (and, for purposes of this agreement, irrespective of the fact that such
Employment Agreement may have expired at any time while this agreement remains
in effect), (the "Employment Agreement");
WHEREAS, Company has established its Executive Deferred Compensation
Plan dated as of April 18, 1996 ("Deferred Compensation Plan") and Employee is
entitled to participate in the Deferred Compensation Plan in accordance with its
terms;
WHEREAS, pursuant to the Plan, the Company has further entered into
that certain Executive Deferred Compensation Rabbi Trust Agreement (the "Trust")
with The Provident Bank, a state-chartered bank, as trustee thereunder
("Trustee");
WHEREAS, in accordance with the terms of the Deferred Compensation
Plan, Employee has elected to cause that number of shares of the Company's
common stock, without par value (the "Shares"), if any, which may otherwise
become issuable to him as the "Stock Bonus" as defined in, and pursuant to the
terms of, Section 3(b), clauses (iv) and (v), of the Employment Agreement to be
instead issued to the Trustee for Employee's benefit to be held by the Trustee
in accordance with the terms of the Trust.
NOW, THEREFORE, pursuant to the Deferred Compensation Plan effective as
of April 15, 1996 (the "Date of Grant"), the Company grants to Trustee for
Employee's benefit under the terms of the Trust, the right to receive the Shares
when and as issuable in accordance with the terms of the Employment Agreement
and this agreement subject to the terms, conditions, limitations and
restrictions hereinafter set forth. Terms used herein and not otherwise defined
shall have the meanings assigned to them in the Deferred Compensation Plan or
the Employment Agreement, as the case may be.
1. Vesting of Awards. The Trustee's right to receive the Shares covered
by this Agreement (any such Shares which are contemplated for future issuance to
Trustee for the benefit of Employee hereunder being hereinafter collectively
referred to as the "Deferred Shares") is conditioned upon the Company's
attainment of ROI for its 1996 fiscal year (and any fiscal year thereafter in
which the Employment Agreement remains in effect or in which Employee remains in
the employ of the Company or a subsidiary of the Company) which represents a
positive percentage increase in Employer's ROI as follows:
<PAGE>
178
(a)
Dollar Value of
Deferred Shares
EBITDA expressed as Issuable Expressed as
Percentage Increase of Percentage of Base
Employer's ROI Compensation
------------------------ ---------------------
up to 103% 0
greater than 103% up to 105% Equivalent to Percentage
Increase of Employer's ROI;
plus, if applicable
greater than 105% up to 110% Additional Percentage Increase
of Employer's ROI multiplied by 2;
plus, if applicable
greater than 110% Additional Percentage
Increase of Employer's ROI
multiplied by 3,
but not to exceed 30% of Base
Compensation
(b) The number of Shares issuable to Trustee will be determined by
dividing (A) the dollar value of the Deferred Shares determined in accordance
with the table above by (B) the closing price of the Company's Common Stock on
the Nasdaq National Market System, or if the Company's Common Stock is not
listed or admitted to trading in such system, the principal securities exchange
on which the Common Stock is listed or admitted to trading on the last trading
date in the period for which the dollar value of the Deferred Shares are
calculated (i.e. December 31, March 31 or the last closing price for the Common
Stock immediately preceding the date Employee ceases employment with the
Company). Any Shares which Trustee is entitled to receive from the Company shall
be issued within thirty (30) days after Employer's ROI is calculated from the
applicable final audited year end income statements of the Company.
(c) In the event of Employee's death or Permanent Disability (as
defined hereinbelow) during the term of the Employment Agreement, the Trustee,
Employee or his estate, as the case may be (to be determined pursuant to the
provisions of the Deferred Compensation Plan then in effect), shall be entitled
to receive a pro rata portion of the Shares, if any, applicable to the fiscal
year in which such death or Permanent Disability occurs. Such pro rata portion
of the Shares shall be determined by a multiplying a fraction (the numerator of
which shall be the number of days in the applicable fiscal year elapsed prior to
the date of death or Permanent Disability, as the case may be, and the
denominator of which shall be three hundred sixty-five (365)) by the dollar
value, if any, of the Deferred Shares that would have been issuable hereunder
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179
if Employee had remained employed under the Employment Agreement for the entire
applicable fiscal year.
(d) Following such death or Permanent Disability of Employee, the
Shares, if any, shall be issued when and as provided in Section 1(b) of this
Agreement.
(e) For purposes of this Section 1, Employee's Permanent Disability
shall be deemed to occur on the date after the first to occur of (i) ninety (90)
consecutive days, or (ii) one hundred eighty (180) days cumulatively in any
twelve (12) month period, of Employee's inability to provide the services
required hereunder of him due to sickness or injury ("Permanent Disability").
(f) In the event the Company terminates Employee's employment for
"cause" (as defined in the Employment Agreement) Employee shall be entitled to
no further benefits under this Agreement.
(g) In the event that Employee's employment is terminated without cause
during the Original Term or any Renewal Term of the Employment Agreement or in
the event that the Original Term or any Renewal Term of the Employment Agreement
shall have expired and shall not have been renewed and Employee thereupon ceases
to be employed by the Company, the Trustee or Employee, as the case may be (to
be determined pursuant to the provisions of the Deferred Compensation Plan as
then in effect) shall be entitled to receive that number of Shares under this
Agreement, issuable on account of the fiscal year in which such cessation of
employment occurs, as determined under Sections 1(a) and 1(b) of this Agreement,
but on a prorated basis calculated in the manner contemplated by Section 1(c) of
this Agreement and issuable on the date contemplated by Section 1(b) of this
Agreement.
2. Restrictions on Transfer. The right to receive the Shares covered by
this Agreement (in trust under the Trust Agreement or otherwise) may not be
transferred, sold, pledged, exchanged, assigned or otherwise encumbered or
disposed of by the Employee, except as provided under the terms of the Deferred
Compensation Plan and the Trust. Any purported transfer, encumbrance or other
disposition that is in violation of this Section 2 shall be null and void. When
and as permitted by the Deferred Compensation Plan, the Committee may waive the
restrictions set forth in this Section 2 with respect to all or any portion of
the Common Shares covered by this Agreement.
3. Dividend, Voting and Other Rights. Unless and until thirty (30) days
after Employer's ROI is finally determined on account of any fiscal year of the
Company contemplated hereby and the Shares covered by this Agreement are issued
in accordance with the terms of Section 1 of this Agreement, no such Shares
shall be deemed to be issued or outstanding and neither the Trustee nor the
Employee shall have any rights of ownership in such Shares nor shall have any
right to vote them or to receive any dividends or other distributions thereon.
From and after such time as any of the Shares shall have been issued to the
Trustee in accordance with the terms of this Agreement and the Deferred
Compensation Plan and the Trust, the Trustee shall be
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180
entitled to such dividend voting and other rights in respect of such shares as
is provided in the Deferred Compensation Plan and the Trust so long as the
Trustee shall continue to hold such Shares in trust for the benefit of the
Employee.
4. Adjustments. The Committee shall make any adjustments in the number
or kind of shares of stock or other securities covered by this Agreement that
the Committee may determine to be equitably required to prevent any dilution or
expansion of the Employee's rights under this Agreement that otherwise would
result from any (a) stock dividend, stock split, combination of shares,
recapitalization or other change in the capital structure of the Company, (b)
merger, consolidation, separation, reorganization or partial or complete
liquidation involving the Company or (c) other transaction or event having an
effect similar to any of those referred to in Section 4(a) or 4(b) hereof.
Furthermore, in the event that any transaction or event described or referred to
in the immediately preceding sentence shall occur, the Committee may provide in
substitution of any or all of the Employee's rights under this Agreement such
alternative consideration as the Committee may determine in good faith to be
equitable under the circumstances.
5. Withholding Taxes. If the Company shall be required to withhold any
federal, state, local or foreign tax in connection with any issuance of the
Common Shares or other securities pursuant to this Agreement, the Employee shall
pay the tax or make provisions that are satisfactory to the Company for the
payment thereof.
6. Right to Terminate Employment. No provision of this Agreement shall
limit in any way whatsoever any right that the Company or a subsidiary may
otherwise have to terminate the employment of the Employee at any time.
7. Relation to Other Benefits. Any economic or other benefit to the
Employee under this Agreement or the Plan shall not be taken into account in
determining any benefits to which the Employee may be entitled under any
profit-sharing, retirement or other benefit or compensation plan maintained by
the Company or a subsidiary and shall not affect the amount of any life
insurance coverage available to any beneficiary under any life insurance plan
covering employees of the Company or a subsidiary.
8. Severability. In the event that one or more of the provisions of
this Agreement shall be invalidated for any reason by a court of competent
jurisdiction, any provision so invalidated shall be deemed to be separable from
the other provisions hereof, and the remaining provisions hereof shall continue
to be valid and fully enforceable.
-4-
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181
9. Governing Law. This Agreement is made under, and shall be construed
in accordance with, the laws of the State of Ohio.
This Agreement is executed by the Company as of the 15th day of April
1996.
CARDINAL REALTY SERVICES, INC.
By: /s/ John B. Bartling, Jr.
----------------------------------------
John B. Bartling, Jr., President and
Chief Executive Officer
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182
The undersigned Employee hereby acknowledges receipt of an executed
original of this Agreement and accepts the beneficial, deferred right to receive
the Shares or other securities covered hereby, subject to the terms and
conditions of the Deferred Compensation Plan and the terms and conditions
hereinabove set forth.
Employee acknowledges that he has been advised that the shares of
Shares to be issued pursuant to this Agreement will not have been registered
under the Securities Act of 1933 and agrees that he will not make any
disposition of such shares unless either (a) such shares have been registered
under said Act or (b) an exemption from the registration provisions of said Act
is applicable to the Trustee's or Employee's proposed disposition of such
shares, as the case may be. Employee understands that the certificates for such
shares may bear a legend substantially as follows:
The shares evidenced by this Certificate have not been
registered under the Securities Act of 1933. Such shares may
not be sold or otherwise transferred until the same have been
registered under said Act or until the Company shall have
received an opinion of legal counsel or a copy of a letter
from the staff of the Division of Corporation Finance of the
Securities and Exchange Commission, in either case
satisfactory to the Company, that such shares may legally be
sold or otherwise transferred without such registration.
/s/ Paul R. Selid
--------------------------------------
Paul R. Selid
Date: April 15, 1996
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183
August 1, 1996
Pat Holder
8615 Freeport Parkway
Suite 200
Irving, Texas 75063
Dear Pat:
The following sets forth our mutual understanding respecting your
employment with the undersigned, Lexford Properties, Inc., a Texas corporation
(herein referred to as "Employer"), and when this letter is signed by you the
same shall constitute an Employment Agreement between Employer and you. For
purposes of this Agreement, you are herein referred to in the third person as
"Employee". The terms of said Employment Agreement are as follows:
1. Employment.
(a) During the term of this Employment Agreement, or any
extension or renewal hereof (for purposes hereof, all references herein
to the term of this Employment Agreement shall be deemed to include
references to the period of extension or renewal hereof, if any),
Employee will devote his full time and best efforts to his employment
and perform diligently such duties as are or may be from time to time
required by the Board of Directors of Employer (the "Board"), which
duties shall be consistent with his position as set forth in paragraph
2 hereof.
(b) Employee shall not, without the prior written consent of
Employer, directly or indirectly, during the term of this Employment
Agreement, other than in the performance of duties naturally inherent
in the business of Employer, Employer's parent corporation, Cardinal
Realty Services, Inc., an Ohio corporation ("Parent") or any direct or
indirect subsidiary of Parent or Employer and in furtherance thereof,
render services of a business, professional or commercial nature to any
other person or firm, whether for compensation or otherwise. For
purposes of this Employment Agreement, all references herein to
subsidiaries of Parent shall be deemed to include references to
subsidiaries of either Parent or Employer now or hereafter existing
whether owned directly or indirectly through one or more
intermediaries.
<PAGE>
184
Pat Holder
August 1, 1996
Page 2
2. Term and Positions; Office.
(a) Subject to the provisions for termination as hereinafter
provided, the term of this Employment Agreement shall be deemed to
begin on August 1, 1996, and shall continue for a term of four (4)
years from such date to and including July 31, 2000.
(b) Employee shall serve as President of Employer and in such
substitute or further offices or positions with Employer, Parent or any
direct or indirect subsidiary of Parent or Employer (consistent with
such named office or position) as shall, from time to time, be assigned
by the Board without, however, any change in Employee's compensation
hereunder.
(c) During the term of this Employment Agreement, Employer
shall provide Employee with use of the office space currently occupied
by Employee and located at 8615 Freeport Parkway, Suite 200, Irving,
Texas 75063.
3. Compensation.
(a) For all services he may render to Employer and any direct
or indirect subsidiary of Parent or Employer during the term of this
Employment Agreement, Employee shall receive an aggregate salary while
he is employed hereunder at the rate of One Hundred Seventy Five
Thousand Dollars ($175,000) per year ("Base Salary"). During the first
year of the term of this Employment Agreement, Employee shall be paid
his Base Salary as follows: Twenty Five Thousand Dollars ($25,000)
shall be paid upon the execution of this Employment Agreement and the
balance of his Base Salary shall be paid in equal installments in
accordance with Employer's customary payroll procedures. During each
subsequent year, Employee shall be paid his entire Base Salary in equal
installments in accordance with Employer's customary payroll
procedures.
(b) In addition to the Base Salary, Employee shall be entitled
to receive, if earned, a performance cash bonus (the "Incentive
Compensation") as a Grade 11 -Property Management Executive under
Parent's 1996 Incentive Compensation Plan (the "Plan") as adopted by
Parent's Board of Directors on March 21, 1996 and as outlined on the
attached Exhibit A to this Employment Agreement up to a maximum of
sixty percent (60%) of Employee's Base Salary earned during fiscal year
1996 while this Employment Agreement is in effect. For purposes of
determining the amount, if any, of Incentive Compensation that Employee
is entitled to in accordance with the calculations contained on Exhibit
A, the target net income-property management for fiscal year 1996 shall
be Six Million Nine Hundred Two Thousand Six Hundred and Seven Dollars
($6,902,607) (it being acknowledged that such target is different than
the target for other employees of Parent under the Plan) and the actual
net income-property management for fiscal year 1996 shall include the
<PAGE>
185
Pat Holder
August 1, 1996
Page 3
actual net profit of Lexford Properties, a Texas joint venture, and its
successors in interest for fiscal year 1996 earned prior to the date
hereof. After December 31, 1996 and during the remaining term of this
Employment Agreement, Employee shall be entitled to receive the same
incentive compensation as other similarly situated property management
executives under Parent's then existing incentive compensation plan(s).
(c) During the term of this Employment Agreement, Employee
shall be entitled to monthly advances ("Advances") not to exceed Two
Thousand Dollars ($2,000) per month regardless of the amount of any
Advances made in prior months. All unpaid Advances received by Employee
shall bear interest ("Interest") at the "prime" or "base" rate of
interest per annum, as announced from time to time by The Provident
Bank or Parent's successor senior lender, plus one percent (1%) until
repaid. Any request for an Advance shall be made by Employee by the
fifth (5th) day of each month upon the receipt of which Employer will
fund such Advance by the fifteenth (15th) day of such month. The
Incentive Compensation earned by Employee, if any, for any period shall
be applied by Parent first to any accrued and unpaid Interest with
respect to Advances made, second to the principal amount of any
outstanding Advances and the balance, if any, shall be paid to
Employee. If the Incentive Compensation earned by Employee for any
period is less than the sum of the outstanding Advances and the accrued
and unpaid Interest thereon, if any, Employee shall pay such deficit
(plus Interest accrued thereon to the date of payment) to Parent within
ninety (90) days of Parent's demand therefor.
4. Additional Compensation. In addition to the compensation as above
stated, Employee shall be entitled to receive such additional compensation, if
any, as may be awarded from time to time by the Board.
5. Termination and Further Compensation.
(a) The employment of Employee under this Employment
Agreement, and the term hereof, may be terminated by Employer for cause
at any time. For purposes hereof the term "cause" includes but is not
limited to:
(i) Employee's fraud, dishonesty, willful misconduct,
or gross negligence in the performance of his duties
hereunder; or
(ii) Employee's material breach of any provision of
this Employment Agreement.
Any termination by reason of the foregoing shall not be in limitation
of any other right or remedy Employer may have under this Employment
Agreement or otherwise.
<PAGE>
186
Pat Holder
August 1, 1996
Page 4
(b) In the event of termination of this Employment Agreement
by Employer pursuant to this paragraph 5, Employee shall be entitled to
no further salary, additional compensation or other benefits under this
Employment Agreement.
6. Renewal. The term of this Employment Agreement may be extended or
renewed by mutual agreement of Employer, acting through the Board, and Employee.
7. Reimbursement. Employer shall reimburse Employee (or provide him
with an expense allowance) for travel, entertainment and other expenses
reasonably and necessarily incurred by Employee in the promotion of Employer's
business.
8. Covenants and Confidential Information.
(a) Employee agrees that during the term of this Employment
Agreement and for a period of one (1) year thereafter (and, as to
clauses (iii) and (iv) of this subparagraph (a), at any time after the
term of this Employment Agreement) he will not, directly or indirectly,
do or suffer any of the following:
(i) Own, manage, control or participate in the
ownership, management or control of, or be employed or engaged
by or otherwise affiliated or associated as a consultant,
independent contractor or otherwise with, any other
corporation, partnership, proprietorship, firm, association,
or other business entity, or otherwise engage in any business,
which is engaged in any manner in, or otherwise competes with,
the business of Employer, Parent or any of Parent's
subsidiaries (as conducted on the date Employee ceases to be
employed by Employer, Parent or any of Parent's subsidiaries
in any capacity, including as a consultant) in the continental
United States (it being acknowledged by Employee that Employer
and Parent each conduct businesses of national scope);
provided, however, that the ownership of not more than one
percent (1%) of the stock of any publicly traded corporation
shall not be a violation of this covenant;
(ii) Employ, assist in employing, or otherwise
associate in business with any present, former or future
employee, officer or agent of Employer, Parent or any of
Parent's subsidiaries;
(iii) Induce any person who is an employee, officer
or agent of Employer, Parent or any of Parent's subsidiaries
to terminate said relationship; or
(iv) Disclose, divulge, discuss, copy or otherwise
use or suffer to be used in any manner, in competition with,
or contrary to the interests of, Employer, Parent or any of
Parent's or Employer's direct or indirect subsidiaries, the
<PAGE>
187
Pat Holder
August 1, 1996
Page 5
customer lists, appraisals, engineering and environmental
reports, market research, investment banking analyses or
financial and engineering data or other trade secrets of
Employer, Parent or any of Parent's subsidiaries, it being
acknowledged by Employee that all such information regarding
the business of Employer, Parent and Parent's subsidiaries
compiled or obtained by, or furnished to, Employee while
Employee shall have been employed by or associated with
Employer is confidential information and Employer's exclusive
property.
(b) Employee expressly agrees and understands that the remedy
at law for any breach by him of this paragraph 8 will be inadequate and
that the damages flowing from such breach are not readily susceptible
to being measured in monetary terms. Accordingly, it is acknowledged
that upon adequate proof of Employee's violation of any legally
enforceable provision of this paragraph 8, Employer shall be entitled
to immediate injunctive relief and may obtain a temporary order
restraining any threatened or further breach. Nothing in this paragraph
8 shall be deemed to limit Employer's remedies at law or in equity for
any breach by Employee of any of the provisions of this paragraph 8
which may be pursued or availed of by Employer.
(c) In the event Employee shall violate any legally
enforceable provision of this paragraph 8 as to which there is a
specific time period during which he is prohibited from taking certain
actions or from engaging in certain activities, as set forth in such
provision, then, in such event, such violation shall toll the running
of such time period from the date of such violation until such
violation shall cease.
(D) EMPLOYEE HAS CAREFULLY CONSIDERED THE NATURE AND EXTENT OF
THE RESTRICTIONS UPON HIM AND THE RIGHTS AND REMEDIES CONFERRED UPON
EMPLOYER UNDER THIS PARAGRAPH 8, AND HEREBY ACKNOWLEDGES AND AGREES
THAT THE SAME ARE REASONABLE IN TIME AND TERRITORY, ARE DESIGNED TO
ELIMINATE COMPETITION WHICH OTHERWISE WOULD BE UNFAIR TO EMPLOYER, DO
NOT STIFLE THE INHERENT SKILL AND EXPERIENCE OF EMPLOYEE, WOULD NOT
OPERATE AS A BAR TO EMPLOYEE'S SOLE MEANS OF SUPPORT, ARE FULLY
REQUIRED TO PROTECT THE LEGITIMATE INTERESTS OF EMPLOYER AND DO NOT
CONFER A BENEFIT UPON EMPLOYER DISPROPORTIONATE TO THE DETRIMENT TO
EMPLOYEE.
9. Severable Provisions. The provisions of this Employment Agreement
are severable and if any one or more provisions are determined to be illegal or
otherwise unenforceable, in whole or in part, the remaining provisions and any
partially unenforceable provision to the extent enforceable in any jurisdiction
shall, nevertheless, be binding and enforceable.
10. Death or Permanent Disability. In the event of Employee's death or
permanent disability (as hereinafter defined) occurring during the term of this
Employment Agreement, this Employment Agreement shall be deemed terminated and
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188
Pat Holder
August 1, 1996
Page 6
he or his estate, as the case may be, shall be entitled to no further salary,
other compensation or other privileges or benefits hereunder, except as to (i)
that portion of any unpaid salary or other benefits accrued and earned by
Employee hereunder up to and including the day of death or disability, as the
case may be and (ii) in the case of permanent disability, continuation of salary
payments for nine (9) months. The phrase "permanent disability" shall be deemed
to occur after one hundred twenty (120) days in the aggregate during any
consecutive twelve (12) month period, or after ninety (90) consecutive days,
during which one hundred twenty (120) or ninety (90) days, as the case may be,
Employee, by reason of his physical or mental disability or illness, shall have
been unable to discharge fully his duties under this Employment Agreement.
11. Binding Agreement. The rights and obligations of Employer under
this Employment Agreement shall inure to the benefit of, and shall be binding
upon, Employer and its successors and assigns, and the rights and obligations of
Employee under this Employment Agreement shall inure to the benefit of, and
shall be binding upon, Employee and his heirs, personal representatives and
estate.
12. Arbitration. Any controversy or claim arising out of or relating to
this Employment Agreement, or the breach thereof, shall be settled by
arbitration in accordance with the Rules of the American Arbitration Association
then pertaining in the City of Columbus, Ohio, and judgment upon the award
rendered by the Arbitrator or Arbitrators may be entered in any Court having
jurisdiction thereof. The Arbitrator or Arbitrators shall be deemed to possess
the power to issue mandatory orders and restraining orders in connection with
such arbitration; provided, however, that nothing in this paragraph 12 shall be
construed so as to deny Employer the right and power to seek and obtain
injunctive relief in a court of equity for any breach or threatened breach by
Employee of any of his covenants contained in subparagraph (a) of paragraph 8
hereof.
13. Notices. Any notice to be given under this Employment Agreement
shall be personally delivered in writing or shall have been deemed duly given
after it is posted in the United States Mails, postage prepaid, registered or
certified, return receipt requested, and if mailed to Employer, shall be
addressed to Employer c/o Parent at Parent's principal place of business,
Attention: John B. Bartling, Jr., President and Chief Executive Officer, and if
mailed to Employee, shall be addressed to him at his home address last shown on
the records of Employer, or at such other address or addresses as either
Employer or Employee may hereafter designate in writing to the other.
14. Waiver. The failure of either party to enforce any provision or
provisions of this Employment Agreement shall not in any way be construed as a
waiver of any such provision or provisions as to any future violations thereof,
nor prevent that party thereafter from enforcing each and every other provision
of this Employment Agreement. The rights granted the parties herein are
cumulative and the waiver of any single remedy shall not constitute a waiver of
such party's right to assert all other legal remedies available to it under the
circumstances.
<PAGE>
189
Pat Holder
August 1, 1996
Page 7
15. Miscellaneous. This Employment Agreement supersedes all prior
employment agreements and understandings between the parties and may not be
modified or terminated orally. No modification, termination or attempted waiver
of this Employment Agreement shall be valid unless in writing and signed by the
party against whom the same is sought to be enforced. This Employment Agreement
shall be governed by and construed according to the laws of the State of Ohio.
If the foregoing understanding respecting the Employment Agreement
between you and the undersigned is acceptable to you, please indicate your
approval thereof by signing a copy of this letter in the space provided below
and return it to the undersigned. Thereupon, the Employment Agreement shall be
in full force and effect in accordance with its terms above set forth.
Sincerely,
LEXFORD PROPERTIES, INC.
By: /s/ Mark D. Thompson
--------------------------
Mark D. Thompson
Vice President
The terms and provisions of the Employment Agreement are hereby
approved and accepted this 1st day of August, 1996.
/s/ Pat Holder
-------------------------------------
Pat Holder
Cardinal Realty Services, Inc. acknowledges and agrees to the
provisions contained in Paragraph 3(b) hereof this 1st day of August, 1996.
CARDINAL REALTY SERVICES, INC.
By: /s/ Mark D. Thompson
-------------------------
Mark D. Thompson
Executive Vice President
190
CARDINAL REALTY SERVICES, INC.
6954 AMERICANA PARKWAY
REYNOLDSBURG, OHIO 43068
August 1, 1996
Pat Holder
8615 Freeport Parkway
Suite 200
Irving, TX 75063
Dear Pat:
The following sets forth our additional understandings with respect to
your employment with Lexford Properties, Inc. ("Employer"), a Texas corporation
and wholly- owned subsidiary of the undersigned, Cardinal Realty Services, Inc.
("Cardinal"), and supplements the employment agreement between Employer and you
of even date herewith (the "Employment Agreement").
As additional consideration for your employment with Employer, so long
as the Employment Agreement is in effect, you shall be entitled to receive, if
earned, in addition to all other compensation set forth in the Employment
Agreement, a restricted stock award for shares of Cardinal's common stock,
valued as of the date of the award as determined in accordance with Cardinal's
1996 Incentive Compensation Plan as adopted by Cardinal's Board of Directors on
March 21, 1996 and outlined on the attached Exhibit A to this letter agreement
(the "Plan"), and having a maximum value of thirty percent (30%) of your Base
Salary (as defined in the Employment Agreement) earned during fiscal year 1996
while the Employment Agreement is in effect (the "Stock Bonus").
You will participate in the Plan as a Grade 11 - Property Management
Executive except that for purposes of determining the amount of your Stock
Bonus, if any, in accordance with the calculations contained on Exhibit A, the
target net income-property management shall be Six Million Nine Hundred Two
Thousand Six Hundred and Seven Dollars ($6,902,607) (it being acknowledged that
such target is different than the target for other employees of Parent under the
Plan) and the actual net income-property management for fiscal year 1996 shall
include the actual net profit of Lexford Properties, a Texas joint venture, and
its successors in interest for fiscal year 1996 earned prior to the date hereof.
<PAGE>
191
PAT HOLDER
AUGUST 1, 1996
PAGE -2-
If the foregoing understanding is acceptable to you, please indicate
your approval thereof by signing a copy of this letter in the space provided
below and return it to the undersigned.
Sincerely,
CARDINAL REALTY SERVICES, INC.
By: /s/ Mark D. Thompson
-------------------------
Mark D. Thompson
Executive Vice President
The terms and provisions of this Letter Agreement are hereby approved
and accepted this 1st day of August, 1996.
By: /s/ Pat Holder
------------------------
Pat Holder
192
RESTRICTED SHARES AGREEMENT
FOR JOSEPH E. MADIGAN
WHEREAS, Joseph E. Madigan ("Grantee") served as interim Chief
Executive Officer and President of, and currently serves as Chairman of the
Board of Directors (the "Board") of, CARDINAL REALTY SERVICES, INC., heretofore
known as Cardinal Industries, Inc. (the "Company"); and
WHEREAS, the Company's 1992 Incentive Equity Plan was authorized by the
United States Bankruptcy Court for the Southern District of Ohio, Eastern
Division, in connection with its approval of the Plan of Reorganization of the
Company and has been amended from time to time which amendments were approved by
the affirmative vote of a majority of the shares of capital stock present and
entitled to vote at such times (as amended, the "Plan"). The Plan is
administered by the Compensation Committee (the "Committee") of the Board of the
Company; and
WHEREAS, the Board has directed that the Company make certain grants to
Grantee for his services.
NOW, THEREFORE, pursuant to the Plan, as of December 1, 1995 (the "Date
of Grant"), the Company grants to Grantee two thousand (2,000) shares of the
Company's common stock, without par value (the "Shares"), subject to the terms
and conditions of the Plan and the terms, conditions, limitations and
restrictions hereinafter set forth. Terms used herein and not otherwise defined
shall have the meanings assigned to them in the Plan.
1. Issuance of Shares. The Shares covered by this agreement shall be
fully paid and nonassessable and shall be represented by a certificate(s)
registered in the name of Grantee and bearing a legend referring to the
restrictions hereinafter set forth.
2. Restrictions on Transfer of the Shares. The Shares subject to this
agreement may not be transferred, sold, pledged, exchanged, assigned or
otherwise encumbered or disposed of by Grantee, except to the Company, until
they have become nonforfeitable in accordance with Section 3 hereof; provided,
however, that Grantee's interest in the Shares covered by this agreement may be
transferred at any time by will or the laws of descent and distribution. Any
purported transfer, encumbrance or other disposition of the Shares covered by
this agreement that is in violation of this Section 2 shall be null and void,
and the other party to any such purported transaction shall not obtain any
rights to or interest in the Shares covered by this agreement. When and as
permitted by the Plan, the Company may waive the restrictions set forth in this
Section 2 with respect to all or any portion of the Shares covered by this
agreement.
1
<PAGE>
193
3. Vesting of the Shares.
(a) One-third of the Shares covered by this agreement, shall
become nonforfeitable on the first, second and third anniversaries of
the Date of Grant (so that 100% of the Shares will be nonforfeitable on
the third anniversary of the Date of Grant), subject to Grantee
remaining as a director of the Company during the applicable vesting
period.
(b) Notwithstanding the vesting provisions of Section 3(a)
hereof, in the event that Grantee's position as a director of the
Company ceases by reason of Grantee's death, all Shares covered by this
agreement shall become immediately vested.
4. Forfeiture of the Shares. In the event of a forfeiture, the
certificates representing all of the Shares covered by this agreement that have
not become nonforfeitable in accordance with Section 3 hereof shall be cancelled
and such Shares shall be deemed to be and to have become authorized but unissued
shares of common stock, without par value, of the Company.
5. Dividend, Voting and Other Rights. Grantee shall, at all times prior
to forfeiture, have all of the rights of a shareholder with respect to the
Shares covered by this agreement, including the right to vote the Shares and
receive any dividends that may be paid thereon; provided, however, that (a) any
cash dividends and other cash distributions that may be paid on any shares
covered by this agreement that have not become nonforfeitable in accordance with
Section 3 hereof shall be automatically sequestered and invested in an
interest-bearing bank account, which shall be subject to the same restrictions
hereunder as the forfeitable Shares on which the cash dividends or other cash
distributions are paid, and (b) any additional Shares that Grantee may become
entitled to receive pursuant to a share dividend or a merger or reorganization
in which the Company is the surviving corporation or any other change in the
capital structure of the Company shall be subject to the same restrictions as
the Shares covered by this agreement.
6. Retention of Share Certificate(s) by the Company. The certificate(s)
representing the Shares covered by this agreement shall be held in custody by
the Company, together with a stock power endorsed in blank by Grantee with
respect thereto, until those shares have become nonforfeitable in accordance
with Section 3 hereof.
7. Adjustments. The Committee shall make any adjustments in the number
or kind of shares of stock or other securities covered by this agreement that
the Committee, in its discretion, may determine to be equitably required to
prevent any dilution or expansion of Grantee's rights under this agreement that
otherwise would result from any (a) stock dividend, stock split, combination of
shares, recapitalization or other change in the capital structure of the
Company, (b) merger, consolidation, separation, reorganization or partial or
complete liquidation involving the Company or (c) other transaction or event
having an effect similar to any of those referred to in Section 7(a) or 7(b)
hereof. Furthermore, in the event that any transaction or event described or
referred to in the immediately preceding sentence shall occur, the Committee may
provide in substitution of any or all
2
<PAGE>
194
of Grantee's rights under this agreement such alternative consideration as the
Committee, in its discretion, may determine to be equitable under the
circumstances.
8. Withholding Taxes. If the Company shall be required to withhold any
federal, state, local or foreign tax in connection with any issuance of
restricted or unrestricted Shares or other securities pursuant to this
agreement, Grantee shall pay the tax or make provisions that are satisfactory to
the Company for the payment thereof.
9. Right to Terminate Employment. No provision of this agreement shall
limit in any way whatsoever any right that the Company or a subsidiary may
otherwise have to terminate the employment of Grantee at any time.
10. Relation to Other Benefits. Any economic or other benefit to
Grantee under this agreement or the Plan shall not be taken into account in
determining any benefits to which Grantee may be entitled under any
profit-sharing, retirement or other benefit or compensation plan maintained by
the Company or a subsidiary and shall not affect the amount of any life
insurance coverage available to any beneficiary under any life insurance plan
covering employees of the Company or a subsidiary.
11. Amendments. Any amendment to the Plan shall be deemed to be an
amendment to this agreement to the extent that the amendment is applicable
hereto; provided, however, that no amendment shall adversely affect the rights
of Grantee with respect to the Shares or other securities covered by this
agreement without Grantee's consent.
12. Severability. In the event that one or more of the provisions of
this agreement shall be invalidated for any reason by a court of competent
jurisdiction, any provision so invalidated shall be deemed to be separable from
the other provisions hereof, and the remaining provisions hereof shall continue
to be valid and fully enforceable.
13. Governing Law. This agreement is made under, and shall be construed
in accordance with, the laws of the State of Ohio.
3
<PAGE>
195
This agreement is executed by the Company as of the 1st day of
December, 1995.
CARDINAL REALTY SERVICES, INC.
By: /s/ John B. Bartling
--------------------------------------
John B. Bartling, President
The undersigned Grantee hereby acknowledges receipt of an executed
original of this agreement and accepts the right to receive the Shares or other
securities covered hereby, subject to the terms and conditions of the Plan and
the terms and conditions hereinabove set forth.
Grantee acknowledges that he has been advised that the Shares covered
by this agreement have not been registered under the Securities Act of 1933 (the
"Act") and agrees that he will not make any disposition of such shares unless
either (a) such shares have been registered under said Act or (b) an exemption
from the registration provisions of said Act is applicable to Grantee's proposed
disposition of such shares. Grantee understands that the certificates for such
shares may bear a legend substantially as follows:
The shares evidenced by this Certificate have not been registered
under the Securities Act of 1933. Such shares may not be sold or
otherwise transferred until the same have been registered under said
Act or until the Company shall have received an opinion of legal
counsel or a copy of a letter from the staff of the Division of
Corporation Finance of the Securities and Exchange Commission, in
either case satisfactory to the Company, that such shares may legally
be sold or otherwise transferred without such registration.
/s/ Joseph E. Madigan
-----------------------------------
JOSEPH E. MADIGAN
Date: December 1, 1995
4
196
RESTRICTED SHARES AGREEMENT
FOR JOSEPH E. MADIGAN
WHEREAS, Joseph E. Madigan ("Grantee") served as interim Chief
Executive Officer and President of, and currently serves as Chairman of the
Board of Directors (the "Board") of, CARDINAL REALTY SERVICES, INC., heretofore
known as Cardinal Industries, Inc. (the "Company"); and
WHEREAS, the Company's 1992 Incentive Equity Plan was authorized by the
United States Bankruptcy Court for the Southern District of Ohio, Eastern
Division, in connection with its approval of the Plan of Reorganization of the
Company and has been amended from time to time which amendments were approved by
the affirmative vote of a majority of the shares of capital stock present and
entitled to vote at such times (as amended, the "Plan"). The Plan is
administered by the Compensation Committee (the "Committee") of the Board of the
Company; and
WHEREAS, the Board has directed that the Company make certain grants to
Grantee for his services.
NOW, THEREFORE, pursuant to the Plan, as of December 1, 1995 (the "Date
of Grant"), the Company grants to Grantee two thousand (2,000) shares of the
Company's common stock, without par value (the "Shares"), subject to the terms
and conditions of the Plan and the terms, conditions, limitations and
restrictions hereinafter set forth. Terms used herein and not otherwise defined
shall have the meanings assigned to them in the Plan.
1. Issuance of Shares. The Shares covered by this agreement shall be
fully paid and nonassessable and shall be represented by a certificate(s)
registered in the name of Grantee and bearing a legend referring to the
restrictions hereinafter set forth.
2. Restrictions on Transfer of the Shares. The Shares subject to this
agreement may not be transferred, sold, pledged, exchanged, assigned or
otherwise encumbered or disposed of by Grantee, except to the Company, until
they have become nonforfeitable in accordance with Section 3 hereof; provided,
however, that Grantee's interest in the Shares covered by this agreement may be
transferred at any time by will or the laws of descent and distribution. Any
purported transfer, encumbrance or other disposition of the Shares covered by
this agreement that is in violation of this Section 2 shall be null and void,
and the other party to any such purported transaction shall not obtain any
rights to or interest in the Shares covered by this agreement. When and as
permitted by the Plan, the Company may waive the restrictions set forth in this
Section 2 with respect to all or any portion of the Shares covered by this
agreement.
<PAGE>
197
3. Vesting of the Shares.
(a) One-third of the Shares covered by this agreement, shall
become nonforfeitable on the first, second and third anniversaries of
the Date of Grant (so that 100% of the Shares will be nonforfeitable
on the third anniversary of the Date of Grant), subject to Grantee
remaining as a director of the Company during the applicable vesting
period.
(b) Notwithstanding the vesting provisions of Section 3(a)
hereof, in the event that Grantee's position as a director of the
Company ceases by reason of Grantee's death, all Shares covered by
this agreement shall become immediately vested.
4. Forfeiture of the Shares. In the event of a forfeiture, the
certificates representing all of the Shares covered by this agreement that have
not become nonforfeitable in accordance with Section 3 hereof shall be cancelled
and such Shares shall be deemed to be and to have become authorized but unissued
shares of common stock, without par value, of the Company.
5. Dividend, Voting and Other Rights. Grantee shall, at all times
prior to forfeiture, have all of the rights of a shareholder with respect to the
Shares covered by this agreement, including the right to vote the Shares and
receive any dividends that may be paid thereon; provided, however, that (a) any
cash dividends and other cash distributions that may be paid on any shares
covered by this agreement that have not become nonforfeitable in accordance with
Section 3 hereof shall be automatically sequestered and invested in an
interest-bearing bank account, which shall be subject to the same restrictions
hereunder as the forfeitable Shares on which the cash dividends or other cash
distributions are paid, and (b) any additional Shares that Grantee may become
entitled to receive pursuant to a share dividend or a merger or reorganization
in which the Company is the surviving corporation or any other change in the
capital structure of the Company shall be subject to the same restrictions as
the Shares covered by this agreement.
6. Retention of Share Certificate(s) by the Company. The
certificate(s) representing the Shares covered by this agreement shall be held
in custody by the Company, together with a stock power endorsed in blank by
Grantee with respect thereto, until those shares have become nonforfeitable in
accordance with Section 3 hereof.
7. Adjustments. The Committee shall make any adjustments in the number
or kind of shares of stock or other securities covered by this agreement that
the Committee, in its discretion, may determine to be equitably required to
prevent any dilution or expansion of Grantee's rights under this agreement that
otherwise would result from any (a) stock dividend, stock split, combination of
shares, recapitalization or other change in the capital structure of the
Company, (b) merger, consolidation, separation, reorganization or partial or
complete liquidation involving the Company or (c) other transaction or event
having an effect similar to any of those referred to in Section 7(a) or 7(b)
hereof. Furthermore, in the event that any transaction or event described or
referred to in the immediately preceding sentence shall occur, the Committee may
provide in substitution of any or all of Grantee's rights under this agreement
such alternative consideration as the Committee, in its discretion, may
determine to be equitable under the circumstances.
<PAGE>
198
8. Withholding Taxes. If the Company shall be required to withhold any
federal, state, local or foreign tax in connection with any issuance of
restricted or unrestricted Shares or other securities pursuant to this
agreement, Grantee shall pay the tax or make provisions that are satisfactory to
the Company for the payment thereof.
9. Right to Terminate Employment. No provision of this agreement shall
limit in any way whatsoever any right that the Company or a subsidiary may
otherwise have to terminate the employment of Grantee at any time.
10. Relation to Other Benefits. Any economic or other benefit to
Grantee under this agreement or the Plan shall not be taken into account in
determining any benefits to which Grantee may be entitled under any
profit-sharing, retirement or other benefit or compensation plan maintained by
the Company or a subsidiary and shall not affect the amount of any life
insurance coverage available to any beneficiary under any life insurance plan
covering employees of the Company or a subsidiary.
11. Amendments. Any amendment to the Plan shall be deemed to be an
amendment to this agreement to the extent that the amendment is applicable
hereto; provided, however, that no amendment shall adversely affect the rights
of Grantee with respect to the Shares or other securities covered by this
agreement without Grantee's consent.
12. Severability. In the event that one or more of the provisions of
this agreement shall be invalidated for any reason by a court of competent
jurisdiction, any provision so invalidated shall be deemed to be separable from
the other provisions hereof, and the remaining provisions hereof shall continue
to be valid and fully enforceable.
13. Governing Law. This agreement is made under, and shall be construed
in accordance with, the laws of the State of Ohio.
2
<PAGE>
199
This agreement is executed by the Company as of the 1st day of
December, 1996
CARDINAL REALTY SERVICES, INC.
By: /s/ John B. Bartling, Jr.
---------------------------
John B. Bartling, Jr.
Its: President
The undersigned Grantee hereby acknowledges receipt of an executed
original of this agreement and accepts the right to receive the Shares or other
securities covered hereby, subject to the terms and conditions of the Plan and
the terms and conditions hereinabove set forth.
Grantee acknowledges that he has been advised that the Shares covered
by this agreement have not been registered under the Securities Act of 1933 (the
"Act") and agrees that he will not make any disposition of such shares unless
either (a) such shares have been registered under said Act or (b) an exemption
from the registration provisions of said Act is applicable to Grantee's proposed
disposition of such shares. Grantee understands that the certificates for such
shares may bear a legend substantially as follows:
The shares evidenced by this Certificate have not been registered
under the Securities Act of 1933. Such shares may not be sold or
otherwise transferred until the same have been registered under said
Act or until the Company shall have received an opinion of legal
counsel or a copy of a letter from the staff of the Division of
Corporation Finance of the Securities and Exchange Commission, in
either case satisfactory to the Company, that such shares may legally
be sold or otherwise transferred without such registration.
/s/ Joseph E. Madigan
-----------------------------------
JOSEPH E. MADIGAN
Date: December 5, 1996
3
200
EMPLOYMENT AGREEMENT
BY AND AMONG CARDINAL REALTY SERVICES, INC.,
LEAF ASSET MANAGEMENT, INC.
AND
LESLIE B. FOX
<PAGE>
201
TABLE OF CONTENTS
Page
1. Employment..............................................................1
2. Term and Positions......................................................2
3. Compensation............................................................3
4. Insurance and Other Benefits............................................9
5. Payment in the Event of Death or Permanent Disability................. 10
6. Termination and Further Compensation...................................11
7. Reimbursement..........................................................13
8. Covenants and Confidential Information.................................13
9. Withholding Taxes......................................................15
10. No Conflicting Agreement...............................................15
11. Severable Provisions...................................................15
12. Binding Agreement......................................................15
13. Arbitration............................................................16
14. Notices................................................................16
15. Waiver.................................................................16
16. CRSI Guaranty..........................................................16
17. Miscellaneous..........................................................16
18. Governing Law..........................................................16
19. Captions and Section Headings..........................................16
20. Miscellaneous..........................................................17
<PAGE>
202
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into as of the 1st
day of June, 1997, by and among LEAF Asset Management, Inc., an Ohio corporation
to be formed ("Employer"), Cardinal Realty Services, Inc., an Ohio corporation
("CRSI"), and Leslie B. Fox ("Employee").
WITNESSETH:
WHEREAS, CRSI, Employer and Employee desire to enter into this
Agreement to assure Employer of the services of Employee, and Employee's
employment for the term set forth herein, and to set forth the rights and duties
of the parties hereto.
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties agree as follows:
1. Employment.
(a) Employer hereby employs Employee, and Employee hereby
accepts such employment, upon the terms and conditions hereinafter set
forth.
(b) During the term of this Agreement, or any renewal or
extension hereof (for purposes hereof, all references herein to the
term of this Agreement shall be deemed to include references to the
period of renewal or extension hereof, if any), Employee shall devote
her full time to her employment and perform with reasonable diligence
such duties as are customarily performed by the Executive Vice
President of Investment Management or similar senior executive officer
charged with primary responsibility for real estate investment
management for a company having the size and structure of CRSI and its
subsidiaries (including Employer), together with such other duties as
may be reasonably requested from time to time by the Board of Directors
of CRSI (the "Board"), the Compensation Committee of the Board (the
"Committee") or CRSI's chief executive officer, which duties: shall be
consistent with the further covenants set forth in Section 2 of this
Agreement, and (ii) shall include the position and responsibilities of
Chief Investment Officer of a legal entity to-be- formed by Employer
which will make investments in various forms of real estate assets
and/or transactions (the "Fund").
(c) Employee shall not, without the prior written consent of
Employer, directly or indirectly, during the term of this Employment
Agreement, other than in the performance of duties naturally inherent
in the businesses of CRSI or any subsidiary of CRSI (including
Employer) and in furtherance thereof, render services of a business,
professional or commercial nature to any other person or firm, for
compensation; provided, however, that so long as it does not interfere
with her full-time employment hereunder, Employee may attend to her
personal outside investments, serve as a director of a corporation
which does not compete with CRSI (as provided in Section 8 hereof), and
serve as director, trustee or officer of or otherwise participate in
educational, welfare, social, religious and civic organizations.
Employee may complete the performance of her professional engagements
which are pending on the date of this Agreement; provided that any such
performance does
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203
not interfere with the performance of her employment duties hereunder.
For purposes of this Agreement, all references herein to subsidiaries
and affiliates of Employer or CRSI shall be deemed to include
subsidiaries and affiliates now or hereafter existing.
2. Term and Positions.
(a) Subject to the provisions for termination as hereinafter
provided, the term of this Agreement shall begin on June 1, 1997 and
shall continue through May 31, 2000 (the "Original Term"). The Original
Term may be extended for additional terms of one year each (each, a
"Renewal Term") upon the mutual agreement of Employer and Employee.
(b) Employee shall, without any compensation in addition to
that which is specifically provided in this Agreement, serve in such
other offices or positions with any subsidiary or affiliate of CRSI as
shall, from time to time, be assigned reasonably by the Board, the
Committee or CRSI's chief executive officer (but such office or
positions shall be consistent with the duties, offices or positions
hereinbefore named as well as the location hereinafter named). It is
agreed that in addition to the provisions of Section 4(c) of this
Agreement and any other obligations due her hereunder, Employee shall
be entitled to the protection of the applicable indemnification
provisions of the Articles of Incorporation and Code of Regulations of
CRSI, the limited liability company organizational documents of
Employer and the corporate or partnership organizational documents of
any such subsidiary or affiliate. Employer will use all commercially
reasonable efforts to maintain its directors and officers liability
insurance for the benefit of, among others, Employee. Employer shall
provide Employee, upon request, evidence that such insurance has been
obtained, and, if not, what steps Employer plans to take to obtain such
coverage. Further, Employer shall continue to employ such efforts until
coverage is so obtained. For purposes of this Agreement, the term: (i)
"affiliate," when used with reference to any Person, means any entity
which, directly or indirectly through one or more intermediaries, is
controlled by, under common control with, or which controls, such
Person; (ii) "control" means (A) the power to direct the management and
policies of the entity in question, directly or indirectly, whether
through ownership of voting securities, by contract or otherwise and
(B) "controlled" and "controlling" have meanings correlative to the
foregoing; and (iii) "subsidiary" means, with reference to any Person,
any corporation, general or limited partnership, limited liability
company, association or other business entity (in each case, a
"Person") (A) of which securities or other ownership interests
representing more than 50% of the equity or more than 50% of the
ordinary voting power or more than 50% of the general partners' or
similar managing interests are, at the time any determination is being
made, owned, controlled or held, directly or indirectly, by such Person
or (B) that, at the time any determination is being made, is otherwise
controlled, by such Person or one or more subsidiaries of such Person
or by such Person and one or more subsidiaries of such Person.
(c) Employee may maintain her permanent residence in the
metropolitan area of Denver, Colorado at all times during the term of
this Agreement and will not be required to relocate such principal
residence in order to perform her duties hereunder. In addition,
Employer covenants and agrees with Employee that Employer will maintain
an operating
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204
budget in an amount of not less than $500,000 per year while this
Agreement remains in effect.
3. Compensation.
(a) For all services she may render to Employer (and any
subsidiary or affiliate of CRSI) during the term of this Agreement,
Employer shall pay to Employee base compensation ("Base Compensation")
on the following terms:
(i) In consideration of Employee's execution of this
Employment Agreement, Employer has paid Employee Sixty
Thousand Dollars ($60,000), the receipt of which Employee
hereby acknowledges.
(ii) For the Original Term and any Renewal Term,
Fourteen Thousand Five Hundred Eighty-three and 33/100 Dollars
($14,583.33) per month.
(iii) Base Compensation payable to Employee under
this Section 3(a) shall be payable in bi-weekly installments.
(iv) Commencing January 1, 1998 Base Compensation may
be increased each fiscal year upon appropriate action by the
Board or the Committee. If increased, such increased dollar
amount shall thereafter constitute "Base Compensation" for all
purposes under this Agreement.
(b) Employer shall pay to Employee bonus compensation during
the term of this Agreement as follows:
(i) For Employer's 1997 fiscal year, and for each
fiscal year thereafter during which this Employment Agreement
remains in effect, Employer will pay to Employee a cash bonus
(together with any amounts due under subsections (ii) through
(iv), inclusive, below, the "Cash Bonus") determined on the
basis of CRSI's aggregate return on equity ("CRSI ROE" as
defined in Exhibit "A-1" attached hereto and incorporated
herein) from investments in real estate (including interests
comprised of receivables) other than through Employer and its
affiliates as follows:
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205
Cash Bonus Expressed as
Percentage of Base
CRSI ROE Compensation
- --------------------------------- -------------------------
up to 5% 0
greater than 5% up to 10% ROE multiplied by .25;
plus, if applicable
----
greater than 10% up to 15% ROE exceeding 10%
multiplied by .375;
plus, if applicable
----
greater than 15% up to 20% ROE exceeding 15%
multiplied by .6125;
plus, if applicable
----
greater than 20% to 25% ROE exceeding 20%
multiplied by .75;
plus, if applicable
----
greater than 25% ROE exceeding 25%
multiplied by 1.0, but not
to exceed a total of
15% of Base Compensation
Employee's Cash Bonus due under this subsection (i)
shall be paid within thirty (30) days after CRSI ROE is
calculated from the applicable final audited year end
financial statements of CRSI.
(ii) In addition to the Cash Bonuses described in
subsection (i) above and subsections (iii) and (iv) below,
Employment Agreement remains in effect, Employer will pay to
Employee, within thirty (30) days of the end of the respective
periods set forth below, a Cash Bonus determined on the basis
of the achievement of the following objectives during the
first two years of the Original Term:
(A) For the one-year period from June 1,
1997 through May 31, 1998 (the "Initial Year"),
Employee shall receive a Cash Bonus on account of her
successful efforts in obtaining equity or preferred
equity (i.e., "mezzanine") capital contributions (or
binding commitments) from parties reasonably
acceptable to CRSI and Employer to the Fund (other
than the capital contribution to be provided to the
Fund by Employer or any subsidiary of Employer; such
third party capital contributions (or binding
commitments) being hereinafter referred to as
"Qualifying Capital Contributions"). The Cash Bonus
payable to Employee on account of Qualifying Capital
Contributions shall equal the dollar amount of
Qualifying Capital Contributions multiplied by
three-thirty-seconds of one percent (i.e., 9.375
basis points), provided, however, that the amount of
such Cash Bonus pursuant to this Section 3(b)(ii)(A)
will not exceed $75,000, and provided further, that
Employee shall not be entitled to any Cash Bonus
under this Section 3(b)(ii)(A) unless Qualifying
Capital Contributions obtained during the Initial
Year exceed $30,000,000.
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(B) Employee shall be entitled to a Cash
Bonus on account of the one-year period from June 1,
1998 through May 31, 1999 (the "Second Year") on
account of equity investments made by the Fund in
real property or like assets from its inception
through the end of the Second Year. The amount of
Employee's Cash Bonus will equal three-thirty-seconds
of one percent (i.e., 9.375 basis points) of the
dollar amount of the Fund's total equity investments;
provided, however, that Employee's Cash Bonus
pursuant to this Section 3(b)(ii)(B) shall not exceed
$75,000.
(iii) In addition to the Cash Bonus described in
subsections (i) and (ii) above, and in subsection (iv) below,
for the one-year period from June 1, 1999 through May 31,
2000, Employer will pay to Employee a Cash Bonus determined on
the basis of Employer's aggregate return on equity ("Employer
ROE" as defined in Exhibit "A-2" attached hereto and
incorporated herein) from investments in real estate by
Employer, as follows:
Cash Bonus Expressed
as a Percentage of
Employer ROE Base Compensation
- -------------------------- -----------------------------------
up to 3% 3.33
greater than 3% up to 6% ROE in excess of 5% multiplied
by 5; plus, if applicable
----
greater than 6% ROE in excess of 6% multiplied
by 6.67; but not to exceed a
total of 45% of Base Compensation
Notwithstanding the foregoing provisions for Cash
Bonus, in no event will Employee's Cash Bonus under this
Section 3(b)(iii) exceed 45% of Base Compensation. Employee's
Cash Bonus due under this subsection (iii) shall be paid
within thirty days after Employer calculates its Employer ROE
on account of any applicable one-year period.
(iv) In addition to the Cash Bonus described in
subsections (i) through (iii), inclusive, above, provided that
Employee remains in the employ of Employer, CRSI or a
subsidiary of CRSI, for the one-year period from June 1, 2000
through May 31, 2001; and for each such subsequent one-year
period thereafter during which this Employment Agreement
remains in effect, Employer will pay to Employee a Cash Bonus
determined on the basis of Employer ROE as follows, unless
otherwise mutually agreed to by Employee and Employer:
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Cash Bonus Expressed
as a Percentage of
Employer ROE Base Compensation
- ------------------------------ -----------------------------------
up to 7% 0
greater than 7% up to 10% ROE in excess of 7%
multiplied by 6;
plus, if applicable
----
greater than 10% ROE in excess of 10%
multiplied by 9;
but not to exceed a total
of 45% of Base Compensation
Notwithstanding the foregoing provisions for Cash
Bonus, in no event will Employee's Cash Bonus under this
Section 3(b)(iv) exceed 45% of Base Compensation. Employee's
Cash Bonus due under this subsection (iv) shall be paid within
thirty days after Employer calculates its Employer ROE on
account of any applicable one-year period.
(v) The Cash Bonus payable to Employee pursuant to
3(b)(i) above, on account of the 1997 fiscal year will be
prorated as follows:
(A) First, Employer will determine the
amount, if any, of the Cash Bonus otherwise payable
under Section 3(b)(i) on account of the full 1997
fiscal year.
(B) Second, the amount of the Cash Bonus
determined in accordance with paragraph (A) above,
will be multiplied by a fraction, the numerator of
which will be the number of days this Employment
Agreement was in effect during Employer's 1997 fiscal
(calendar) year and the denominator of which will be
365.
(vi) For the Original Term and any Renewal Term,
Employer will pay as commissions, with respect to all property
management fees received by CRSI's wholly-owned subsidiary,
Lexford Properties, Inc., in respect of property management
contracts obtained (A) as a direct result of Employee's
business development efforts from Persons in which the Fund
does not maintain an interest ("Employee Source Fees") or (B)
from the management of real property assets in which the Fund
maintains an equity ownership interest ("Fund Source Fees"),
on a monthly basis, an amount equal to 5% of gross Employee
Source Fees and 1% of gross Fund Source Fees.
(c) Further, CRSI and Employer, respectively, shall, and
hereby do, grant to Employee rights to receive (1) shares of CRSI's
common stock without par value (the "Common Stock") pursuant and
subject to the terms and conditions of those certain Restricted Shares
Agreements (the "Restricted Shares Agreements") to be entered into
between Employer and Employee, in customary forms reasonably acceptable
to Employer and Employee (such Common Stock to be referred to herein as
"Restricted Stock"), as well as (2) a Fund incentive payment, as
follows:
(i) seven thousand five hundred (7,500) shares of
Restricted Stock, one-third of which shall vest on each of the
third, fourth and fifth anniversaries of the Date of Grant (as
defined, and more particularly set forth, in the applicable
Restricted Shares Agreement), which issuance of shares shall
be made to The Provident Bank, a state chartered bank, as
Trustee ("Trustee") under that certain Executive Deferred
Compensation Rabbi Trust Agreement (the "Trust") for
Employee's benefit and shall be made effective on June 1,
1997.
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(ii) nine thousand (9,000) shares of Restricted Stock,
which shall be issued to Trustee for Employee's benefit on
June 1, 1997 and shall vest as follows (and as more
particularly set forth under the applicable Restricted Shares
Agreement):
A. one-third when the internal rate of
return on CRSI's investment in Employer (as
determined in accordance with the methodology set
forth in Exhibit "B"; hereinafter, the "CRSI IRR")
exceeds 12% as of the end of a fiscal year of CRSI;
and
B. one-third when CRSI IRR exceeds 15% as of
the end of a fiscal year of CRSI; and
C. one-third when CRSI IRR exceeds 18% as of
the end of a fiscal year of CRSI.
(iii) Unless Employee shall resign from her employment or
Employee's employment shall have theretofore been terminated
pursuant to Section 6(a)(i) below, or for "cause" (as defined
in Section 6 below), upon the completion of the liquidation,
sale, merger, initial public offering or other transaction in
which CRSI realizes the value of the investments of Employer
(the "Exit"), within 90 days of the Exit, Employee will
receive an amount (the "Fund Incentive Payment") determined on
the basis of all Distributions (as defined in Exhibit A-2
attached hereto) from Employer to CRSI at or prior to the Exit
to the extent exceeding capital invested by CRSI or any
subsidiary of CRSI (other than Employer) in Employer or the
Fund ("CRSI Return"), as follows:
CRSI IRR Fund Incentive Payment
-------- ----------------------
up to 15% 0
greater than 15% up to 17.9% 5% of CRSI Return
greater than 17.9% up to 19.9% 8.5% of CRSI Return
greater than 19.9% up to 24.9% 12% of CRSI Return
greater than 24.9% 15% of CRSI Return
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(iv) Notwithstanding the foregoing, the vesting of all
Restricted Stock and Stock Options (as defined hereinbelow)
granted under this Agreement shall be accelerated in the event
of any of the following:
(A) CRSI shall merge or be merged or
consolidated with, another corporation and as a
result of such merger or consolidation less than
seventy percent (70%) of the outstanding voting
securities of the surviving or resulting corporation
shall be owned in the aggregate by the former
shareholders of CRSI as the same shall have existed
immediately prior to such merger or consolidation;
(B) CRSI shall sell or transfer to one or
more persons, corporations or entities, in a single
transaction or a series of related transactions, more
than one-half of the assets of CRSI unless by an
affirmative vote of two-thirds of the members of the
Board, the transaction or transactions are exempted
from the operation of this provision based on a good
faith finding that the transaction or transactions
are not within the intended scope of this definition
for purposes of this Agreement;
(C) a person, within the meaning of Section
3(a)(9) or Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended and as in effect on
the date hereof (the "Exchange Act"), shall become
the beneficial owner (as defined in Rule 13d-3
promulgated under the Exchange Act and as in effect
on the date hereof) of thirty percent (30%) or more
of the outstanding voting securities of CRSI; or
(D) any shareholder of CRSI shall nominate a
person to the Board, which nominee shall be elected
to the Board without receiving the prior endorsement
of the Board or its Nominating Committee.
(d) CRSI shall grant to Employee options to purchase twelve
thousand five hundred (12,500) shares of Common Stock ("Stock Options")
in accordance with, and subject to, CRSI's 1992 Amended and Restated
Incentive Equity Plan and a Non-Qualified Stock Option Agreement to be
entered into between Employer and Employee, in customary form
reasonably acceptable to CRSI and Employee (the "Option Award
Agreement" and, together with the Restricted Shares Agreements, the
"Award Agreements"). The Stock Options shall have an exercise price
equal to the closing price of CRSI's Common Stock on the NASDAQ
National Market System on June 2, 1997, one-fifth of which shall vest
on the first, second, third, fourth and fifth anniversaries of the date
of such grant, which grant shall be made pursuant to the Option Award
Agreement.
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(e) Employee shall be entitled to participate in any pension
or profit-sharing plan covering highly compensated salaried employees
which CRSI may have in effect or hereafter adopt during the term of
this Employment Agreement.
(f) With respect to the Stock Options, upon each occasion
Employee recognizes compensation income, as a result of the exercise of
the Stock Options, Employee may borrow from Employer an amount equal to
forty-eight percent (48%) (subject to appropriate adjustment if the
combined federal, state and local income tax rate on compensation
income differs in the year(s) in which Employee exercises the Stock
Option from the rate in effect in 1997) of the compensation income so
recognized by Employee, provided that Employee is still employed by
Employer. The loan shall (i) bear interest at a rate per annum equal to
that charged from time to time to CRSI under CRSI's senior secured
credit facility (which credit facility, as of the date of this
Agreement, is provided to CRSI by The Provident Bank) plus two percent
(2%) payable monthly, in arrears, (ii) be secured by a pledge of the
Common Stock which Employee acquired upon exercise of the Stock
Options, (ii) be due and payable upon the earliest of each sale of any
shares of the Common Stock so pledged (to the extent of the net
proceeds of such sale with any balance remaining being thereafter due
as otherwise provided under this Section 3(f)) or, if later, one (1)
year following the date upon which Employee is no longer employed by
Employer, CRSI or any other subsidiary of CRSI, and (iv) be evidenced
by a promissory note and a pledge agreement in customary form
reasonably acceptable to CRSI and Employee.
4. Insurance and Other Benefits.
(a) Employee shall be entitled to such medical,
hospitalization, health, accident, life and disability insurance and
pension plan benefits and such other similar employment privileges and
benefits as are afforded generally from time to time to other executive
officers of CRSI, or subsidiaries of CRSI, and in no event shall
Employee be provided benefits at a level less generous than those
benefits provided to any other officer or employee of CRSI, or any
subsidiary of CRSI. Further, with respect to medical coverage, Employer
shall provide medical coverage for Employee and her dependents at least
equal to the value of coverage afforded Employee on the effective date
of this Agreement if such coverage is available on commercially
reasonable terms.
(b) Employee shall be entitled to periods of vacation and sick
leave allowance each year, which shall be the same as provided under
CRSI's vacation and sick leave policy for executive officers, but in no
event shall Employee be entitled to, with full pay and benefits, less
than four (4) weeks paid vacation and customary holidays.
(c) Employer shall indemnify, to the full extent then
permitted by law, Employee if she was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative,
by reason of the fact that she is or was a member of the Board or an
officer or agent of CRSI or any subsidiary of CRSI (including
Employer), or is or was serving at the request of Employer as a
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211
director, trustee, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise. Employer shall
pay expenses, including reasonable attorney's fees, incurred by
Employee in defending any such action, suit or proceeding as they are
incurred, in advance of the final disposition thereof, and may pay, in
the same manner and to the full extent then permitted by law, such
expenses incurred by any other person. The indemnification and payment
of expenses provided hereby shall not be exclusive of, and shall be in
addition to, any other rights granted to Employee seeking
indemnification under any law, the Articles of Incorporation of CRSI,
any agreement, vote of shareholders or disinterested members of the
Board, or otherwise, both as to action in official capacities and as to
action in another capacity while she is a member of the Board, officer,
employee or agent of CRSI or any subsidiary of CRSI (including
Employer), and shall continue as to Employee after she has ceased to be
a member of the Board, trustee, officer, employee or agent and shall
inure to the benefit of the heirs, executors, and administrators of
Employee.
(d) Employee shall be reimbursed for the cost of reasonable
legal fees incurred by her in connection with negotiating and drafting
this Agreement and ancillary matters as they relate to this Agreement,
including, without limitation, the issuance of the Restricted Stock and
Stock Options and the negotiation and drafting of the Award Agreements.
5. Payment in the Event of Death or Permanent Disability.
(a) In the event of Employee's death or Permanent Disability
(as defined hereinbelow) during the term of this Agreement, Employee or
her estate, as the case may be, shall be entitled to receive (i) an
amount equal to the lesser of (x) any remaining Base Compensation for
the Original Term or any then current Renewal Term or (y) one year of
Base Compensation reduced by any and all payments made to Employee
pursuant to any disability insurance policy maintained by CRSI or
Employer for Employee's benefit pursuant to Section 4(a) of this
Agreement or otherwise (the "Disability Policy"), (ii) a pro rata
portion of the Cash Bonus, if any, applicable to the fiscal year and/or
the one year period, as appropriate, in which such death or Permanent
Disability occurs, as the Cash Bonus is determined under Section 3(b)
of this Agreement, and (iii) any shares of Restricted Stock and Stock
Options that have vested in accordance with the provisions of the Award
Agreements. Such pro rata portion of the Bonus shall be determined by
multiplying a fraction (the numerator of which shall be the number of
days in the applicable fiscal year or the one-year period, as
appropriate, elapsed prior to the date of death or Permanent
Disability, as the case may be, and the denominator of which shall be
three hundred sixty-five (365)) by the amount of the Bonus that would
have been payable, if any, pursuant to such Section 3(b), if Employee
had remained employed under this Agreement for the entire applicable
fiscal year. Notwithstanding the foregoing, in the event that the
Employee's death or Permanent Disability shall occur on or before
December 31, 1997, then in such event the Cash Bonus, if any, payable
to Employee or her estate on account of Section 3(b)(i) shall be
determined by multiplying a fraction (the numerator of which shall be
the number of days elapsed from the date of this Employment Agreement
until the date of death or Permanent Disability, as the case may be,
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212
and the denominator of which shall be three hundred sixty five (365))
by the amount, if any, of the Bonus that would have been payable
pursuant to such Section 3(b)(i), if Employee had been employed by
Employer during the entire 1997 fiscal year without giving further
effect to the provisions of Section 3(b)(iv).
(b) Following the death or Permanent Disability of Employee,
the Cash Bonus, if any, shall be paid when and as provided in Section
3(b) of this Agreement. The other compensation to be paid pursuant to
this Section 5 shall be paid, at the election of Employee or Employee's
designated beneficiary (who shall be her husband, unless she gives
Employer written notice of a different designation), either (i) in two
(2) equal annual installments paid within the two (2) year period
beginning on the date of such death or Permanent Disability, as the
case may be, or (ii) in one (1) lump sum paid within ninety (90) days
after the date of such death or Permanent Disability, as the case may
be.
(c) Employee shall be entitled to no further compensation or
other benefits under this Agreement, except as to that portion of any
benefits accrued and earned by her hereunder up to and including the
date of such death or Permanent Disability.
(d) For purposes of this Section 5, Employee's Permanent
Disability shall be deemed to occur on the date after the first to
occur of (i) ninety (90) consecutive days, or (ii) one hundred eighty
(180) days cumulatively in any twelve (12) month period, of Employee's
inability to provide the services required hereunder of her due to
sickness or injury ("Permanent Disability").
6. Termination and Further Compensation.
(a) The employment of Employee under this Agreement, and the
term hereof, subject to Employee's rights set forth elsewhere herein,
may be terminated by Employer:
(i) in the event that the Fund fails to obtain
Qualifying Capital Contributions aggregating at least
$30,000,000 on or before October 31, 1998, or
(ii) on death or Permanent Disability of Employee, or
(iii) for cause at any time by action of the Board or
the Committee. For purposes hereof, the term "cause" shall
mean:
A. an intentional act of fraud,
embezzlement, theft or any other material violation
of law in connection with Employee's duties or in the
course of her employment with Employer;
B. intentional wrongful damage to material
assets of Employer or CRSI;
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213
C. intentional wrongful disclosure of
material confidential information of Employer or
CRSI;
D. intentional wrongful engagement in any
competitive activity which would constitute a
material breach of the duty of loyalty; or
E. breach of any material term of this
Agreement.
No act, or failure, to act, on the part of Employee shall be
deemed "intentional", or provide the basis for termination for
cause, if it was due primarily to an error in judgment or
negligence without bad faith or reckless disregard, but shall
be deemed "intentional" only if done, or omitted to be done,
by Employee not in good faith and without reasonable belief
that her action or omission was in or not opposed to the best
interest of Employer. Failure to meet performance standards or
objectives of Employer shall not constitute cause for purposes
hereof. Further, in the event Employer terminates Employee for
"cause", Employer shall give Employee written notice as to the
specific circumstances giving rise to its decision to
terminate Employee for cause ("Notice"), and, Employee shall
be given the opportunity to respond, with counsel, to
Employer's decision and Employer's articulated circumstances,
such responses shall be before the Board or the Committee and
shall take place within fourteen (14) days of Employer's
Notice. Any termination by reason of the foregoing shall not
be in limitation of any other right or remedy Employer may
have under this Agreement or otherwise. On any termination of
this Agreement, Employee shall be deemed to have resigned from
all offices and directorships held by Employee in CRSI and any
subsidiaries and affiliates of CRSI (including Employer).
(b) In the event of termination of this Agreement for any of
the reasons set forth in Section 6(a)(iii) hereof, Employee shall be
entitled to no further compensation or other benefits under this
Agreement, except as to (i) that portion of any unpaid Base
Compensation reduced by any and all payments made, or to be made, to
Employee pursuant to the Disability Policy and other benefits accrued
and earned by her hereunder up to and including the effective date of
such termination; and (ii) any of her shares of Restricted Stock and
Stock Options that have vested in accordance with the provisions of
Section 3(c) of this Agreement and the Award Agreements.
(c) In the event that Employee's employment is terminated by
Employer other than pursuant to Section 6(a) of this Employment
Agreement during the Original Term or any Renewal Term of this
Employment Agreement or in the event that the Original Term or any
Renewal Term of this Employment Agreement shall have expired and shall
not have been renewed and Employee thereupon ceases to be employed by
CRSI or any of its subsidiaries, Employee shall be entitled to receive:
(i) an amount equal to her Base Compensation, and any other benefits
due Employee under Section 4 of this Agreement, payable for the then
unexpired portion of the Original Term, if any, plus the immediately
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214
succeeding nine (9) months; (ii) the Cash Bonus, if any, applicable to
the fiscal year and one-year period, respectively, in which such
cessation of employment occurs, as such Cash Bonus is determined under
Section 3(b) of this Employment Agreement but on a prorated basis
calculated in the manner contemplated by Section 5(a) of this
Employment Agreement; and (iii) all of her shares of Restricted Stock
and the future right to receive the Fund Incentive Payment awarded
pursuant to Section 3(c)(iii) of this Employment Agreement and Stock
Options immediately fully vested, and otherwise free of any forfeiture
provisions or other restrictions imposed under the Award Agreements
except for any restrictions or limitations imposed by applicable state
and federal securities laws and regulations. In the event that
Employee's employment is terminated without cause during a Renewal
Term, Employee will be entitled to receive all of the compensation and
benefits provided for in the immediately preceding sentence; except
that Employee's Base Compensation will continue solely for the nine (9)
month period immediately following such termination, irrespective of
the originally scheduled duration of the then current Renewal Term.
Upon any such termination by Employer, other than for "cause",
Employee's obligations to Employer hereunder shall terminate.
(d) In the event that Employee shall resign from employment
during the Original Term or any Renewal Term of this Employment
Agreement for any reason other than a breach by Employer of the terms
of this Agreement, Employee shall be entitled to receive solely (i)
that portion of any unpaid Base Compensation and other benefits accrued
and earned by her hereunder up to, and including, the effective date of
such Resignation; and (ii) any of her shares of Restricted Stock and
Stock Options that have vested in accordance with the provisions of
Section 3(c) of this Employment Agreement and the Award Agreements.
7. Reimbursement. Employer shall reimburse Employee or provide her with
an expense allowance during the term of this Agreement, for travel,
entertainment and other expenses reasonably and necessarily incurred by Employee
in performing services hereunder or, generally, the promotion of Employer's
business. Employee shall furnish such documentation with respect to
reimbursement to be paid under this Section 7 as Employer shall reasonably
request.
8. Covenants and Confidential Information.
(a) Employee acknowledges Employer's reliance and expectation
of Employee's continued commitment of performance of her duties and
responsibilities during the term of this Agreement. In light of such
reliance and expectation on the part of Employer, Employee agrees that
during the period beginning on the effective date of this Employment
Agreement and ending eighteen (18) months after the termination of
Employee's employment for cause or pursuant to Section 6(a)(i) of this
Employment Agreement or Employee's resignation from employment with
Employer, she shall not, directly or indirectly, do or suffer any of
the following:
(i) own, manage, control or participate in the
ownership, management, or control of, or be employed or
engaged by or otherwise affiliated or associated as a
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215
consultant, independent contractor or otherwise with, any
other corporation, partnership, proprietorship, firm,
association, or other business entity, or otherwise engage in
any business, which directly of indirectly acquires, or
solicits to develop, rehabilitate or acquire real property,
property management agreements or any other service agreement
directly relating to any property with respect to which CRSI,
Employer or any of CRSI's subsidiaries or affiliates has
contracted to acquire, develop, rehabilitate or provide (or is
actively negotiating to acquire, develop, rehabilitate or
provide) similar services on the date that Employee shall no
longer be employed by Employer, CRSI or any other subsidiary
of CRSI; provided, however, that the ownership of not more
than one percent (1%) of the stock of any publicly-traded
corporation shall not be deemed a violation of this covenant;
(ii) employ, assist in employing, or solicit for
employment any employee or officer of Employer, CRSI or any of
CRSI's affiliates or subsidiaries who was employed or retained
at any time during the one (1) year period preceding the date
on which Employee's employment with Employer is terminated;
(iii) induce any person who is an employee or officer
of Employer, CRSI or any of CRSI's affiliates or subsidiaries
to terminate said relationship in such a manner which is not
in furtherance of Employer's or CRSI's interest; or
(iv) except in performing services hereunder,
disclose, divulge, discuss, copy or otherwise use or suffer to
be used in any manner, in competition with, or contrary to the
interests of, Employer, or any of CRSI's affiliates or
subsidiaries, the proprietary customer lists, limited partner
lists, research or data or other trade secrets of Employer,
CRSI or any of CRSI's affiliates or subsidiaries, it being
acknowledged by Employee that any such proprietary information
regarding the business of Employer, CRSI and CRSI's affiliates
or subsidiaries compiled or obtained by, or furnished to,
Employee while Employee shall have been employed by or
associated with Employer, CRSI or any subsidiary of CRSI, and
which has not been publicly disclosed by Employer or CRSI or
which is otherwise not available in the public domain, is
confidential information and Employer's or CRSI's property.
(b) Employee expressly agrees and understands that the remedy
at law for any breach by her of this Section 8 will be inadequate and
that the damages flowing from such breach are not readily susceptible
to being measured in monetary terms. Accordingly, it is acknowledged
that upon adequate proof of Employee's violation of any legally
enforceable provision of this Section 8, Employer shall be entitled to
immediate injunctive relief and may obtain a temporary order
restraining any threatened or further breach. Nothing in this Section 8
shall be deemed to limit Employer's remedies at law or in equity for
any breach by Employee of any of the provisions of this Section 8 which
may he pursued or availed of by Employer.
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(c) Employee has carefully considered the nature and extent of
the restrictions upon her and the rights and remedies conferred upon
Employer under this Section 8, and hereby acknowledges and agrees that
the same are reasonable in time and territory, are designed to
eliminate competition which otherwise would be unfair to Employer and
CRSI, do not stifle the inherent skill and experience of Employee,
would not operate as a bar to Employee's sole means of support, are
fully required to protect the legitimate interests of Employer and CRSI
and do not confer a benefit upon Employer and CRSI disproportionate to
the detriment to Employee.
9. Withholding Taxes. All payments to Employee shall be subject to
withholding on account of federal, state and local taxes as required by law. Any
amounts remitted by Employer to the appropriate taxing authorities as taxes
withheld by Employer from Employee on income realized by Employee with respect
to the vesting of her shares of Restricted Stock, any exercise of the Stock
Option or the receipt of the Fund Incentive Payment shall reduce the amounts
payable by Employer to Employee by way of compensation or otherwise. If any
particular payment required hereunder is insufficient to provide the amount of
such taxes required to be withheld, Employer may withhold such taxes from any
other payment due Employee. In the event all cash payments due Employee are
insufficient to provide the required amount of such withholding taxes, Employee,
within thirty (30) days of written notice from Employer, shall pay to Employer
the amount of such withholding taxes in excess of all cash payments due Employee
at the time such withholding is required to be made by Employer, provided,
however, the foregoing shall not be deemed to limit Employee's right to receive
loans from Employer to fund income tax obligations as set forth in Section 3 of
this Agreement.
10. No Conflicting Agreement. The parties hereto represent and warrant
to each other that they are not a party to any agreement, contract or
understanding, whether employment or otherwise, which would restrict or would
prohibit them from undertaking or performing in accordance with the terms and
conditions of this Agreement. Employer and CRSI represent and covenant that
their execution, delivery and performance of this Agreement has been duly
authorized and ratified, and that they have full authority to consummate the
undertakings set forth herein including, without limitation, the grant of the
Restricted Stock, Stock Options and Restricted Interest to Employee.
11. Severable Provisions. The provisions of this Agreement are
severable and if any one or more provisions may be determined to be illegal or
otherwise unenforceable, in whole or in part, the remaining provisions and any
partially unenforceable provision to the extent enforceable in any jurisdiction
shall, nevertheless, be binding and enforceable.
12. Binding Agreement. The rights and obligations of CRSI and Employer
under this Agreement shall inure to the benefit of, and shall be binding upon,
CRSI, Employer and their respective successors and assigns, and the rights and
obligations (other than obligations to perform services) of Employee under this
Agreement shall inure to the benefit of, and shall be binding upon, Employee and
her heirs, personal representatives and estate. Employee agrees and acknowledges
that the services Employee is providing Employer, CRSI and any other
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subsidiaries of CRSI are personal to Employer and CRSI, and Employee shall not
have the right to assign this Agreement without Employer's written consent.
13. Arbitration. Any controversy or claim arising out of or relating to
this Agreement, or the breach thereof, shall be settled by arbitration in
accordance with the Rules of the American Arbitration Association then
pertaining in the City of Columbus, Ohio, and judgment upon the award rendered
by the Arbitrator or Arbitrators may be entered in any Court having jurisdiction
thereof. The Arbitrator or Arbitrators shall be deemed to possess the powers to
issue mandatory orders and restraining orders in connection with such
arbitration; provided, however, that nothing in this Section 13 shall be
construed so as to deny Employer and CRSI the right and power to seek and obtain
injunctive relief in a court of equity for any breach or threatened breach of
Employee of any of her covenants contained in Section 8(a) of this Agreement.
14. Notices. Any notice to be given under this Agreement shall be
personally delivered in writing or shall have been deemed duly given when
received after it is posted in the United States mail, postage prepaid,
registered or certified, return receipt requested, and if mailed to Employer or
CRSI, shall be addressed to CRSI's principal place of business, attention:
General Counsel, and if mailed to Employee, shall be addressed to her at her
home address last known on the records of Employer, or at such other address or
addresses as either Employer or Employee may hereafter designate in writing to
the other.
15. Waiver. The failure of either party to enforce any provision or
provisions of this Agreement shall not in any way be construed as a waiver of
any such provision or provisions as to any future violations thereof, nor
prevent that party thereafter from enforcing each and every other provision of
this Agreement. The rights granted the parties herein are cumulative and the
waiver of any single remedy shall not constitute a waiver of such party's right
to assert all other legal remedies available to it under the circumstances.
16. CRSI Guaranty. CRSI covenants and agrees with Employee that in the
event Employer fails to timely satisfy any of its obligations hereunder then
CRSI will pay or perform or cause the payment or performance of such
obligations.
17. Miscellaneous. This Agreement supersedes all prior agreements and
understandings between the parties and may not be modified or terminated orally.
No modification, termination or attempted waiver shall be valid unless in
writing and signed by the party against whom the same it is sought to be
enforced.
18. Governing Law. This Agreement shall be governed by and construed
according to the laws of the State of Ohio.
19. Captions and Section Headings. Captions and section headings used
herein are for convenience and are not a part of this Agreement and shall not be
used in construing it.
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20. Miscellaneous. Where necessary or appropriate to the meaning
hereof, the singular and plural shall be deemed to include each other, and the
masculine and neuter shall be deemed to include each other.
IN WITNESS WHEREOF, the parties have executed this Employment Agreement
on the day and year first set forth above.
"EMPLOYER"
LEAF ASSET MANAGEMENT, INC., an Ohio Limited
Liability Company to be formed
By: /s/ John B. Bartling, Jr.
----------------------------
JOHN B. BARTLING, JR., President
and Chief Executive Officer
"CRSI"
CARDINAL REALTY SERVICES, INC.
By: /s/ John B. Bartling, Jr.
------------------------------
JOHN B. BARTLING, JR., President
and Chief Executive Officer
"EMPLOYEE"
/s/ Leslie B. Fox
---------------------------------
LESLIE B. FOX
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EXHIBIT "A-1"
"ROE FORMULA FOR CRSI PORTFOLIO
Section 3(b)(i) of the Employment Agreement
"CRSI ROE" means, for any fiscal year, the solution (expressed as a
percentage) of a fraction, (a) the numerator of which equals the Portfolio FMV
as of December 31 of such fiscal year, minus the Portfolio FMV as of December 31
of the immediately preceding fiscal year, plus the amount of Distributions for
such fiscal year, plus or minus the increase or decrease, as the case may be, in
the aggregate working capital of the Portfolio Entities, and (b) the denominator
of which equals the Portfolio FMV as of December 31 of the immediately preceding
fiscal year.
"Portfolio FMV" means the aggregate fair market value of the interests
(both debt and equity) of CRSI and its affiliates in the Portfolio Entities,
determined as to each interest by applying the Applicable Capitalization Rate
against the 12-month trailing net operating income (calculated on a basis
consistent with CRSI's past practices) of the property underlying the subject
interest, less a replacement reserve of $300 per unit and subtracting therefrom
the following: (a) first mortgage debt; (b) subordinated mortgage debt owed to
any party other than CRSI or its affiliates; (c) the excess, if any, of current
liabilities over current assets; (d) the proportionate value of the interests of
limited partners, co-general partners or similarly-situated interestholders; and
(e) deemed costs-of-sale equal to 4% of gross value.
"Applicable Capitalization Rate" means (a) with respect to all
interests comprising the Portfolio as of January 1, 1997, 10.5; and (b) with
respect to all interests placed in the Portfolio after January 1, 1997, the
capitalization rate at which the property underlying the subject interest was
valued at the time it was acquired, as evidenced by the presentation materials
provided to the authorized investment committee at the time of the acquisition.
"Portfolio Entities" means the partnerships, corporations, limited
liability companies or other entities in which CRSI holds, as of January 1,
1997, a whole or partial equity interest, and which entities are primarily
engaged in the ownership of multifamily real estate or interests therein.
"Portfolio" means the real estate owned, directly or indirectly, by the
Portfolio Entities.
"Distributions" means any and all cash distributions to CRSI or its
affiliates from the Portfolio Entities other than fees paid for services
rendered, less the direct expenses and overhead allocation assigned to
"Investment Management", as determined on the same basis utilized for purposes
of the segmented reporting in the Form 10-K of CRSI for the year ended December
31, 1996.
<PAGE>
220
EXHIBIT "B"
Terms used but not otherwise defined in this Exhibit B have the
meanings given them in the preceding Employment Agreement and Exhibit A-2.
"CRSI IRR" means, at the time of determination, the discount rate at
which the present value of the Distributions are equivalent to CRSI's aggregate
contributions to the capital of Employer and the Fund (which contributions to
capital shall be deemed to include, without limitation, any direct payments by
CRSI or any of its subsidiaries (other than Employer) of Employer or Fund
operating or other expenses to the extent not deducted from Distributions).
221
RESTRICTED SHARES AGREEMENT (STOCK AWARD)
FOR LESLIE B. FOX
WHEREAS, Leslie B. Fox ("Employee") and LEAF Asset Management, Inc.
("LEAF"), an Ohio corporation to be formed and an affiliate of Cardinal Realty
Services, Inc. ("Company"), and the Company have heretofore entered into that
certain Employment Agreement dated as of June 1, 1997, as amended (as the same
may be further amended, restated, amended and restated, modified, or
supplemented from time to time after the date hereof, the "Employment
Agreement);
WHEREAS, Company has established its Executive Deferred Compensation
Plan dated as of April 18, 1996 ("Deferred Compensation Plan") and Employee is
entitled to participate in the Deferred Compensation Plan in accordance with its
terms;
WHEREAS, pursuant to the Plan, the Company has further entered into
that certain Executive Deferred Compensation Rabbi Trust Agreement (the "Trust")
with The Provident Bank, a state-chartered bank, as trustee thereunder
("Trustee");
WHEREAS, in accordance with the terms of the Deferred Compensation
Plan, Employee has elected to cause the seven thousand five hundred (7,500)
shares of the Company's common stock, without par value (the "Shares"),
otherwise issuable to her under the terms of this Restricted Shares Agreement
(Stock Award) to be instead issued to the Trustee for Employee's benefit to be
held by the Trustee in accordance with the terms of the Trust;
NOW, THEREFORE, pursuant to the Deferred Compensation Plan effective as
of June 1, 1997 (the "Date of Grant"), the Company grants to Trustee for
Employee's benefit under the terms of the Trust, the Shares subject to the
terms, conditions, limitations and restrictions hereinafter set forth. Terms
used herein and not otherwise defined shall have the meanings assigned to them
in the Deferred Compensation Plan.
1. Issuance of Shares. The Shares covered by this agreement are shares
of Other Restricted Stock within the meaning of the Deferred Compensation Plan
and shall be fully paid and nonassessable and shall be represented by a
certificate(s) registered in the name of the Trustee and bearing a legend
referring to the restrictions hereinafter set forth.
2. Restrictions on Transfer of the Shares. The Shares subject to this
agreement may not be transferred, sold, pledged, exchanged, assigned or
otherwise encumbered or disposed of, except to the Company, and shall remain the
sole property of and subject to the Trust until they have become nonforfeitable
in accordance with Section 3 hereof and for so long thereafter as may be
required under the terms of the Deferred Compensation Plan and the Trust. Any
purported transfer, encumbrance or other disposition of the Shares covered by
this agreement that is in violation of this Section 2 shall be null and void,
and the other party to any such purported transaction shall not obtain any
rights to or interest in the Shares covered by this agreement. The
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Company may waive the restrictions set forth in this Section 2 (but not in the
Deferred Compensation Plan or the Trust) with respect to all or any portion of
the Shares covered by this agreement.
3. Vesting of the Shares.
(a) One-third of the Shares covered by this agreement, shall
become nonforfeitable on the third, fourth and fifth anniversaries of
the Date of Grant (so that 100% of the Shares will be nonforfeitable on
the fifth anniversary of the Date of Grant), subject to the Employee
remaining in the continuous employ of the Company or a subsidiary
during the applicable vesting period. For the purposes of this
agreement: "subsidiary" shall mean a corporation, partnership, limited
liability company, joint venture, unincorporated association or other
entity in which the Company has a direct or indirect ownership or other
equity interest of more than fifty percent (50%); the continuous
employment of the Employee with the Company or a subsidiary shall not
be deemed to have been interrupted, and the Employee shall not be
deemed to have ceased to be an employee of the Company or a subsidiary,
by reason of (i) the transfer of her employment among the Company and
its subsidiaries or (ii) a leave of absence approved by the Committee
for illness, military or governmental service or other reasons.
(b) Notwithstanding the vesting provisions of Section 3(a)
hereof, in the event that Employee's employment with the Company
ceases, any Shares not vested will be forfeited.
(c) Notwithstanding the vesting provisions of Sections 3(a)
and (b) hereof, in the event that Employee's employment ceases by
reason of (i) Employee's death, (ii) Employee's Permanent Disability
(as defined in the Employment Agreement) or (iii) the Company's
termination of Employee's employment without "cause" (as defined in the
Employment Agreement) or in the event the Employment Agreement is not
renewed and the Company terminates Employee's employment with the
Company for any reason other than "cause", all of the Shares covered by
this agreement shall become immediately nonforfeitable.
(d) Notwithstanding the vesting provisions of Sections 3(a)
and (b) hereof, in the event of any of the following:
(i) The Company shall merge or be merged or
consolidated with, another corporation and as a result of such
merger or consolidation less than seventy percent (70%) of the
outstanding voting securities of the surviving or resulting
corporation shall be owned in the aggregate by the former
shareholders of the Company as the same shall have existed
immediately prior to such merger or consolidation;
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(ii) The Company shall sell or transfer to one or
more persons, corporations or entities, in a single
transaction or a series of related transactions, more than
one-half of the assets of LEAF, unless by an affirmative vote
of two-thirds of the members of the Board, the transaction or
transactions are exempted from the operation of this provision
based on a good faith finding that the transaction or
transactions are not within the intended scope of this
definition for purposes of this agreement;
(iii) A person, within the meaning of Section 3(a)(9)
or Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended and as in effect on the date hereof (the "Exchange
Act"), shall become the beneficial owner (as defined in Rule
13d-3 promulgated under the Exchange Act and as in effect on
the date hereof) of thirty percent (30%) or more of the
outstanding voting securities of LEAF; or
(iv) Any shareholder of the Company shall nominate a
person to the Board, which nominee shall be elected to the
Board without receiving the prior endorsement of the Board or
its Nominating Committee.
4. Forfeiture of the Shares. In the event of a forfeiture, the
certificates representing all of the Shares covered by this agreement that have
not become nonforfeitable in accordance with Section 3 hereof shall be cancelled
and such Shares shall be deemed to be and to have become authorized but unissued
shares of common stock, without par value, of the Company.
5. Dividend, Voting and Other Rights. So long as the Trustee continues
to hold the Shares in accordance with the Trust, all dividend, voting and other
rights will be exercised and enjoyed by the Trustee in accordance with the terms
of the Trust for the benefit of Employee, subject, however, to the terms of
Section 4 and this Section 5. In the event that for any reason prior to vesting
of any of the Shares in accordance with Section 3 above, the Deferred
Compensation Plan and the Trust shall no longer remain in effect or the Trustee
shall have otherwise ceased to hold the Shares for Employee's benefit, the
Employee shall, at all times prior to forfeiture, have all of the rights of a
shareholder with respect to the Shares covered by this agreement, including the
right to vote the Shares and receive any dividends that may be paid thereon;
provided, however, that (a) any cash dividends and other cash distributions that
may be paid on any Shares covered by this agreement that have not become
nonforfeitable in accordance with Section 3 hereof shall be automatically
sequestered and invested in an interest-bearing bank account, which shall be
subject to the same restrictions hereunder as the forfeitable Shares on which
the cash dividends or other cash distributions are paid, and (b) any additional
Shares that the Employee may become entitled to receive pursuant to a share
dividend or a merger or reorganization in which the Company is the surviving
corporation or any other change in the capital structure of the Company shall be
subject to the same restrictions as the Shares covered by this agreement.
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6. Retention of Share Certificate(s) by Company. The certificate(s)
representing the Shares covered by this agreement shall be held in custody by
the Company, together with a stock power endorsed in blank by the Trustee with
respect thereto, until those shares have become nonforfeitable in accordance
with Section 3 hereof.
7. Adjustments. The Committee shall make any adjustments in the number
or kind of shares of stock or other securities covered by this agreement that
the Committee, in its discretion, may determine to be equitably required to
prevent any dilution or expansion of the Employee's beneficial rights under this
agreement that otherwise would result from any (a) stock dividend, stock split,
combination of shares, recapitalization or other change in the capital structure
of the Company, (b) merger, consolidation, separation, reorganization or partial
or complete liquidation involving the Company or (c) other transaction or event
having an effect similar to any of those referred to in Section 7(a) or 7(b)
hereof. Furthermore, in the event that any transaction or event described or
referred to in the immediately preceding sentence shall occur, the Committee may
provide in substitution of any or all of the Employee's beneficial rights under
this agreement such alternative consideration as the Committee, in its
discretion, may determine to be equitable under the circumstances.
8. Withholding Taxes. If the Company shall be required to withhold any
federal, state, local or foreign tax in connection with any issuance of
restricted or unrestricted Shares or other securities pursuant to this
agreement, the Employee shall pay the tax or make provisions that are
satisfactory to the Company for the payment thereof.
9. Right to Terminate Employment. No provision of this agreement shall
limit in any way whatsoever any right that the Company or a subsidiary may
otherwise have to terminate the employment of the Employee at any time.
10. Relation to Other Benefits. Any economic or other benefit to the
Employee under this agreement or the Deferred Compensation Plan shall not be
taken into account in determining any benefits to which the Employee may be
entitled under any profit-sharing, retirement or other benefit or compensation
plan maintained by the Company or a subsidiary and shall not affect the amount
of any life insurance coverage available to any beneficiary under any life
insurance plan covering employees of the Company or a subsidiary.
11. Severability. In the event that one or more of the provisions of
this agreement shall be invalidated for any reason by a court of competent
jurisdiction, any provision so invalidated shall be deemed to be separable from
the other provisions hereof, and the remaining provisions hereof shall continue
to be valid and fully enforceable.
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225
12. Governing Law. This agreement is made under, and shall be construed
in accordance with, the laws of the State of Ohio.
This agreement is executed by the Company as of the first day of June,
1997.
CARDINAL REALTY SERVICES, INC.
By: /s/ John B. Bartling, Jr.
----------------------------
John B. Bartling, Jr.,
President and Chief Executive Officer
The undersigned Employee hereby acknowledges receipt of an executed
original of this agreement and accepts the beneficial, deferred right to receive
the Shares or other securities covered hereby, subject to the terms and
conditions of the Deferred Compensation Plan and the terms and conditions
hereinabove set forth.
Employee acknowledges that she has been advised that the Shares covered
by this agreement have not been registered under the Securities Act of 1933 and
agrees that she will not make any disposition of such shares unless either (a)
such Shares have been registered under said Act or (b) an exemption from the
registration provisions of said Act is applicable to the Trustee's or Employee's
proposed disposition of such Shares, as the case may be. Employee understands
that the certificates for such Shares may bear a legend substantially as
follows:
The shares evidenced by this Certificate have not been registered
under the Securities Act of 1933. Such shares may not be sold or
otherwise transferred until the same have been registered under said
Act or until the Company shall have received an opinion of legal
counsel or a copy of a letter from the staff of the Division of
Corporation Finance of the Securities and Exchange Commission, in
either case satisfactory to the Company, that such shares may legally
be sold or otherwise transferred without such registration.
/s/ Leslie B. Fox
-----------------------------------
LESLIE B. FOX
Date: June 1, 1997
5
226
RESTRICTED SHARES AGREEMENT (INVESTMENT RETURN)
FOR LESLIE B. FOX
WHEREAS, Leslie B. Fox ("Employee") and LEAF Asset Management, Inc.
("LEAF"), an Ohio corporation to be formed and an affiliate of Cardinal Realty
Services, Inc. ("Company"), and the Company have heretofore entered into that
certain Employment Agreement dated as of June 1, 1997, as amended (as the same
may be further amended, restated, amended and restated, modified, or
supplemented from time to time after the date hereof, the "Employment
Agreement);
WHEREAS, Company has established its Executive Deferred Compensation
Plan dated as of April 18, 1996 ("Deferred Compensation Plan") and Employee is
entitled to participate in the Deferred Compensation Plan in accordance with its
terms;
WHEREAS, pursuant to the Plan, the Company has further entered into
that certain Executive Deferred Compensation Rabbi Trust Agreement (the "Trust")
with The Provident Bank, a state-chartered bank, as trustee thereunder
("Trustee");
WHEREAS, in accordance with the terms of the Deferred Compensation
Plan, Employee has elected to cause the nine thousand (9,000) shares of the
Company's common stock, without par value (the "Shares"), otherwise issuable to
her under the terms of this Restricted Shares Agreement (Investment Return) to
be instead issued to the Trustee for Employee's benefit to be held by the
Trustee in accordance with the terms of the Trust;
NOW, THEREFORE, pursuant to the Deferred Compensation Plan effective as
of June 1, 1997 (the "Date of Grant"), the Company grants to Trustee for
Employee's benefit under the terms of the Trust, the Shares subject to the
terms, conditions, limitations and restrictions hereinafter set forth. Terms
used herein and not otherwise defined shall have the meanings assigned to them
in the Deferred Compensation Plan or in the Employment Agreement.
1. Issuance of Shares. The Shares covered by this agreement are shares
of Other Restricted Stock within the meaning of the Deferred Compensation Plan
and shall be fully paid and nonassessable and shall be represented by a
certificate(s) registered in the name of the Trustee and bearing a legend
referring to the restrictions hereinafter set forth.
2. Restrictions on Transfer of the Shares. The Shares subject to this
agreement may not be transferred, sold, pledged, exchanged, assigned or
otherwise encumbered or disposed of, except to the Company, and shall remain the
sole property of and subject to the Trust until they have become nonforfeitable
in accordance with Section 3 hereof and for so long thereafter as may be
required under the terms of the Deferred Compensation Plan and the Trust. Any
purported transfer, encumbrance or other disposition of the Shares covered by
this agreement that is in violation of this Section 2 shall be null and void,
and the other party to any such purported transaction shall not obtain any
rights to or interest in the Shares covered by this agreement. The
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227
Company may waive the restrictions set forth in this Section 2 (but not in the
Deferred Compensation Plan or the Trust) with respect to all or any portion of
the Shares covered by this agreement.
3. Vesting of the Shares.
(a) The Shares covered by this agreement shall become
nonforfeitable as follows:
(i) one-third when CRSI IRR exceeds 12% as of the end
of a fiscal year of the Company, and
(ii) one-third when CRSI IRR exceeds 15% as of the
end of a fiscal year of the Company, and
(iii) one-third when CRSI IRR exceeds 18% as of the
end of a fiscal year of the Company;
subject to the Employee remaining in the continuous employ of the
Company or a subsidiary during the applicable vesting period. For the
purposes of this agreement, "subsidiary" shall mean a corporation,
partnership, limited liability company, joint venture, unincorporated
association or other entity in which the Company has a direct or
indirect ownership or other equity interest of more than fifty percent
(50%); the continuous employment of the Employee with the Company or a
subsidiary shall not be deemed to have been interrupted, and the
Employee shall not be deemed to have ceased to be an employee of the
Company or a subsidiary, by reason of (i) the transfer of her
employment among the Company and its subsidiaries or (ii) a leave of
absence approved by the Committee for illness, military or
governmental service or other reasons.
(b) Notwithstanding the vesting provisions of Section 3(a)
hereof, in the event that Employee's employment with the Company
ceases, any Shares not vested will be forfeited.
(c) Notwithstanding the vesting provisions of Sections 3(a)
and (b) hereof, in the event that Employee's employment ceases by
reason of (i) Employee's death, (ii) Employee's Permanent Disability
(as defined in the Employment Agreement) or (iii) the Company's
termination of Employee's employment without "cause" (as defined in
the Employment Agreement) or in the event the Employment Agreement is
not renewed and the Company terminates Employee's employment with the
Company for any reason other than "cause", all of the Shares covered
by this agreement shall become immediately nonforfeitable.
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228
(d) Notwithstanding the vesting provisions of Sections 3(a)
and (b) hereof, in the event of any of the following:
(i) The Company shall merge or be merged or
consolidated with, another corporation and as a result of such
merger or consolidation less than seventy percent (70%) of the
outstanding voting securities of the surviving or resulting
corporation shall be owned in the aggregate by the former
shareholders of the Company as the same shall have existed
immediately prior to such merger or consolidation;
(ii) The Company shall sell or transfer to one or
more persons, corporations or entities, in a single
transaction or a series of related transactions, more than
one-half of the assets of the Company, unless by an
affirmative vote of two-thirds of the members of the Board,
the transaction or transactions are exempted from the
operation of this provision based on a good faith finding that
the transaction or transactions are not within the intended
scope of this definition for purposes of this agreement;
(iii) A person, within the meaning of Section 3(a)(9)
or Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended and as in effect on the date hereof (the "Exchange
Act"), shall become the beneficial owner (as defined in Rule
13d-3 promulgated under the Exchange Act and as in effect on
the date hereof) of thirty percent (30%) or more of the
outstanding voting securities of the Company; or
(iv) Any shareholder of the Company shall nominate a
person to the Board, which nominee shall be elected to the
Board without receiving the prior endorsement of the Board or
its Nominating Committee.
4. Forfeiture of the Shares. In the event of a forfeiture, the
certificates representing all of the Shares covered by this agreement that have
not become nonforfeitable in accordance with Section 3 hereof shall be cancelled
and such Shares shall be deemed to be and to have become authorized but unissued
shares of common stock, without par value, of the Company.
5. Dividend, Voting and Other Rights. So long as the Trustee continues
to hold the Shares in accordance with the Trust, all dividend, voting and other
rights will be exercised and enjoyed by the Trustee in accordance with the terms
of the Trust for the benefit of Employee, subject, however, to the terms of
Section 4 and this Section 5. In the event that for any reason prior to vesting
of any of the Shares in accordance with Section 3 above, the Deferred
Compensation Plan and the Trust shall no longer remain in effect or the Trustee
shall have otherwise ceased to hold the Shares for Employee's benefit, the
Employee shall, at all times prior to forfeiture, have all of the rights of a
shareholder with respect to the Shares covered by this agreement, including the
right to vote the Shares and receive any dividends that may be paid
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229
thereon; provided, however, that (a) any cash dividends and other cash
distributions that may be paid on any Shares covered by this agreement that have
not become nonforfeitable in accordance with Section 3 hereof shall be
automatically sequestered and invested in an interest-bearing bank account,
which shall be subject to the same restrictions hereunder as the forfeitable
Shares on which the cash dividends or other cash distributions are paid, and (b)
any additional Shares that the Employee may become entitled to receive pursuant
to a share dividend or a merger or reorganization in which the Company is the
surviving corporation or any other change in the capital structure of the
Company shall be subject to the same restrictions as the Shares covered by this
agreement.
6. Retention of Share Certificate(s) by Company. The certificate(s)
representing the Shares covered by this agreement shall be held in custody by
the Company, together with a stock power endorsed in blank by the Trustee with
respect thereto, until those shares have become nonforfeitable in accordance
with Section 3 hereof.
7. Adjustments. The Committee shall make any adjustments in the number
or kind of shares of stock or other securities covered by this agreement that
the Committee, in its discretion, may determine to be equitably required to
prevent any dilution or expansion of the Employee's beneficial rights under this
agreement that otherwise would result from any (a) stock dividend, stock split,
combination of shares, recapitalization or other change in the capital structure
of the Company, (b) merger, consolidation, separation, reorganization or partial
or complete liquidation involving the Company or (c) other transaction or event
having an effect similar to any of those referred to in Section 7(a) or 7(b)
hereof. Furthermore, in the event that any transaction or event described or
referred to in the immediately preceding sentence shall occur, the Committee may
provide in substitution of any or all of the Employee's beneficial rights under
this agreement such alternative consideration as the Committee, in its
discretion, may determine to be equitable under the circumstances.
8. Withholding Taxes. If the Company shall be required to withhold any
federal, state, local or foreign tax in connection with any issuance of
restricted or unrestricted Shares or other securities pursuant to this
agreement, the Employee shall pay the tax or make provisions that are
satisfactory to the Company for the payment thereof.
9. Right to Terminate Employment. No provision of this agreement shall
limit in any way whatsoever any right that the Company or a subsidiary may
otherwise have to terminate the employment of the Employee at any time.
10. Relation to Other Benefits. Any economic or other benefit to the
Employee under this agreement or the Deferred Compensation Plan shall not be
taken into account in determining any benefits to which the Employee may be
entitled under any profit-sharing, retirement or other benefit or compensation
plan maintained by the Company or a subsidiary and shall not affect the amount
of any life insurance coverage available to any beneficiary under any life
insurance plan covering employees of the Company or a subsidiary.
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230
11. Severability. In the event that one or more of the provisions of
this agreement shall be invalidated for any reason by a court of competent
jurisdiction, any provision so invalidated shall be deemed to be separable from
the other provisions hereof, and the remaining provisions hereof shall continue
to be valid and fully enforceable.
12. Governing Law. This agreement is made under, and shall be construed
in accordance with, the laws of the State of Ohio.
This agreement is executed by the Company as of the first day of June,
1997.
CARDINAL REALTY SERVICES, INC.
By: /s/ John B. Bartling, Jr.
------------------------------
John B. Bartling, Jr.,
President and Chief Executive Officer
The undersigned Employee hereby acknowledges receipt of an executed
original of this agreement and accepts the beneficial, deferred right to receive
the Shares or other securities covered hereby, subject to the terms and
conditions of the Deferred Compensation Plan and the terms and conditions
hereinabove set forth.
Employee acknowledges that she has been advised that the Shares
covered by this agreement have not been registered under the Securities Act of
1933 and agrees that she will not make any disposition of such shares unless
either (a) such Shares have been registered under said Act or (b) an exemption
from the registration provisions of said Act is applicable to the Trustee's or
Employee's proposed disposition of such Shares, as the case may be. Employee
understands that the certificates for such Shares may bear a legend
substantially as follows:
The shares evidenced by this Certificate have not been registered
under the Securities Act of 1933. Such shares may not be sold or
otherwise transferred until the same have been registered under said
Act or until the Company shall have received an opinion of legal
counsel or a copy of a letter from the staff of the Division of
Corporation Finance of the Securities and Exchange Commission, in
either case satisfactory to the Company, that such shares may legally
be sold or otherwise transferred without such registration.
/s/ Leslie B. Fox
-----------------------------------
LESLIE B. FOX
Date: June 1, 1997
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231
EMPLOYMENT AGREEMENT
BETWEEN LEXFORD PROPERTIES, INC.
AND
JAMES ALEXANDER
<PAGE>
232
TABLE OF CONTENTS
Page
1. Employment................................................................1
2. Term and Positions........................................................1
3. Compensation..............................................................2
4. Insurance and Other Benefits..............................................4
5. Payment in the Event of Death or Permanent Disability.....................4
6. Termination and Further Compensation......................................5
7. Reimbursement.............................................................7
8. Covenants and Confidential Information....................................7
9. Withholding Taxes.........................................................8
10. No Conflicting Agreement..................................................8
11. Severable Provisions......................................................9
12. Binding Agreement.........................................................9
13. Arbitration...............................................................9
14. Notices...................................................................9
15. Waiver....................................................................9
16. Amendment.................................................................9
17. Governing Law............................................................10
18. Captions and Section Headings............................................10
19. Miscellaneous............................................................10
<PAGE>
233
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into as of the 1st
day of January, 1997, between Lexford Properties, Inc., a Texas corporation
("Employer"), and James Alexander ("Employee").
WITNESSETH:
WHEREAS, Employer and Employee desire to enter into this Agreement to
assure Employer of the services of Employee, and Employee's employment for the
term set forth herein, and to set forth the rights and duties of the parties
hereto.
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties agree as follows:
1. Employment.
(a) Employer hereby employs Employee, and Employee hereby
accepts such employment, upon the terms and conditions hereinafter set
forth.
(b) During the term of this Agreement, or any renewal or
extension hereof (for purposes hereof, all references herein to the
term of this Agreement shall be deemed to include references to the
period of renewal or extension hereof, if any), Employee shall devote
his full time to his employment and perform with reasonable diligence
such duties as are customarily performed by the Vice President for a
company having the size and structure of Employer and its subsidiaries,
together with such other duties as may be reasonably requested from
time to time by the Board of Directors of Employer (the "Board"), which
duties shall be consistent with the further covenants set forth in
Section 2 of this Agreement.
(c) Employee shall not, without the prior written consent of
Employer, directly or indirectly, during the term of this Employment
Agreement, other than in the performance of duties naturally inherent
in the businesses of Employer or any subsidiary of Employer and in
furtherance thereof, render services of a business, professional or
commercial nature to any other person or firm, for compensation. For
purposes of this Agreement, all references herein to subsidiaries and
affiliates of Employer shall be deemed to include subsidiaries and
affiliates now or hereafter existing.
2. Term and Positions.
(a) Subject to the provisions for termination as hereinafter
provided, the term of this Agreement shall begin on January 1, 1997 and
shall continue through December 31, 1997 (the "Original Term"). The
Original Term may be extended for additional terms of one year each
(each, a "Renewal Term") upon the mutual agreement of Employer and
Employee.
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(b) Employee shall, without any compensation in addition to
that which is specifically provided in this Agreement, serve as Vice
President of Employer, and in such other offices or positions with any
subsidiary or affiliate of Employer as shall, from time to time, be
assigned reasonably by the Board (but such office or positions shall be
consistent with the duties, offices or positions hereinbefore named).
(c) To the extent that the Board shall request during the term
of this Agreement, Employee shall serve as a member of the Board or as
a member of the Board of Directors of any subsidiary or affiliate of
Employer.
(d) During the term of this Employment Agreement, Employer
shall provide Employee with use of the office space currently occupied
by Employee and located at 8615 Freeport Parkway, Suite 200, Irving,
Texas 75063.
3. Compensation.
(a) For all services he may render to Employer (and any
subsidiary or affiliate) during the term of this Agreement, Employer
shall pay to Employee base compensation ("Base Compensation") and
commissions ("Commissions") on the following terms:
(i) For the Original Term and any Renewal Term, One
Hundred and Twenty-five Thousand Dollars ($125,000) per annum
as Base Compensation.
(ii) Base Compensation payable to Employee under this
Section 3(a) shall be payable in bi-weekly installments.
(iii) Base Compensation may be increased in any
subsequent fiscal year, during which this Agreement may remain
in effect, upon appropriate action by the Board. If increased,
such increased dollar amount shall prospectively constitute
"Base Compensation" for all purposes under this Agreement.
(iv) For the Original Term and any Renewal Term,
Employer will pay as commissions, with respect to all property
management fees received by Employer in respect of property
management contracts obtained as a direct result of Employee's
business development efforts ("Employee Source Fees"), amounts
as follows: (A) on a monthly basis, an amount equal to 1.5% of
gross Employee Source Fees, and (B) provided that Employee
remains an employee of Employer at such time, within 90 days
of the end of Employer's fiscal year, an amount equal to 3.5%
of gross Employee Source Fees derived from property management
contracts which at the end of the fiscal year have been in
effect for a period of at least 12 months. For purposes of
this subsection (a)(iv), fees received by Employer after
January 1, 1997 from affiliates of Messrs. Beneke and Krieg
(but not other existing clients of Employer) will be deemed to
result from the efforts of Employee.
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(b) Employer shall pay to Employee bonus compensation during
the term of this Agreement as follows:
(i) In addition to the Base Compensation and
Commissions, Employee shall be entitled to receive, if earned,
a performance cash bonus (the "Cash Bonus") as a Grade 11
Property Management Executive under an incentive compensation
plan of Cardinal Realty Services, Inc. ("Cardinal") as may be
adopted and amended or replaced by the Board of Directors of
Cardinal from time to time up to a maximum of forty-five
percent (45%) of Employee's Base Compensation earned during
fiscal year 1997 and subsequent fiscal years, if any, while
this Employment Agreement is in effect.
(ii) Employee's Cash Bonus, if any, due under
subsection (i) above shall be paid within thirty (30) days
after the issuance the applicable final audited year end
income statements of Employer.
(iii) In addition to the Cash Bonus, for Employer's
1997 fiscal year, and for each fiscal year thereafter during
which this Employment Agreement remains in effect, Cardinal
will grant to Employee a stock bonus ("Stock Bonus"; and,
together with the Cash Bonus, the "Bonus") payable in shares
of Cardinal's common stock, without par value (the "Common
Stock"), in accordance with and subject to a Deferred Shares
Award Agreement (the "Deferred Shares Agreement") to be
entered into between Cardinal. The dollar amount of the Stock
Bonus will be determined on the same basis as the Cash Bonus
(including the limitations set forth in the partial-year
provision set forth in Section 6(c)), except that the dollar
value of the Stock Bonus will equal 2/3 of the value of the
Cash Bonus.
(iv) The number of shares constituting the Stock
Bonus payable to Employee will be determined by dividing (A)
the dollar value of the Stock Bonus determined in accordance
with this Section 3(b) and the Incentive Compensation Plan by
(B) the closing price of Cardinal's Common Stock on the NASDAQ
National Market System, or if Cardinal's Common Stock is not
listed or admitted to trading in such system, the principal
securities exchange on which Cardinal's Common Stock is listed
or admitted to trading on the last trading date in the period
for which the Stock Bonus is calculated (i.e. December 31 or
the last closing price for the Common Stock immediately
preceding the date Employee ceases employment with Employer).
Any Stock Bonus which Employee is entitled to receive from
Employer shall be issued on the same date as the Cash Bonus
for the same period. No fractional share shall be payable to
Employee in connection with the Stock Bonus, but Employee will
be entitled to a cash payment equal to the dollar value of any
fractional share to which he would otherwise be entitled under
the Stock Bonus, to be paid to Employee together with the
payment of Employee's Cash Bonus hereunder.
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(c) Further, Cardinal will grant to Employee rights to receive
5,000 shares of Common Stock of Cardinal pursuant to the terms and
conditions of that certain Restricted Shares Agreement (the "Restricted
Shares Agreement") to be entered into between Cardinal and Employee, in
the form attached hereto as Exhibit A (such Common Stock to be referred
to herein as "Restricted Stock"). The Restricted Shares Agreement shall
provide for five thousand (5,000) shares of Restricted Stock, one-third
of which shall vest on each of the third, fourth and fifth
anniversaries of the Date of Grant (as defined, and more particularly
set forth, in the applicable Restricted Shares Agreement), which
issuance of shares shall be made effective on January 1, 1997. As used
hereunder, the term "vest" shall mean that Employee shall own the
Restricted Shares free from any restriction, encumbrance, or
limitation, except for any such restriction or limitation imposed by
applicable state and federal securities laws and regulations and except
for the terms of Employer's Executive Deferred Compensation Plan and
the terms of the Trust Agreement.
(d) Cardinal will grant to Employee options to purchase two
thousand five hundred (2,500) shares of Employer's Common Stock ("Stock
Options") in accordance with, and subject to, Cardinal's Incentive
Equity Plan, as amended, and a Non-Qualified Stock Option Agreement to
be entered into between Cardinal and Employee, in the form attached
hereto as Exhibit C (the "Option Award Agreement" and, together with
the Deferred Shares Agreement and the Restricted Shares Agreements, the
"Award Agreements"). The Stock Options shall have an exercise price
equal to the closing price of Employer's Common Stock on the NASDAQ
National Market System on December 31, 1997, one-third of which shall
vest on the third, fourth and fifth anniversaries of the date of such
grant, which grant shall be made pursuant to the Option Award
Agreement.
4. Insurance and Other Benefits. Employee shall be entitled to such
medical, hospitalization, health, accident, life and disability insurance and
pension plan benefits and such other similar employment privileges and benefits
as are afforded generally from time to time to other executive officers of
Employer, or subsidiaries of Employer.
5. Payment in the Event of Death or Permanent Disability.
(a) In the event of Employee's death or Permanent Disability
(as defined hereinbelow) during the term of this Agreement, Employee or
his estate, as the case may be, shall be entitled to receive (i) an
amount equal to (A) the lesser of (x) any remaining Base Compensation
for the Original Term or any then current Renewal Term or (y) one year
of Base Compensation reduced by (B) any and all payments made to
Employee pursuant to any disability insurance policy maintained by
Employer for Employee's benefit pursuant to Section 4(a) of this
Agreement or otherwise (the "Disability Policy"), (ii) a pro rata
portion of the Bonus, if any, applicable to the fiscal year in which
such death or Permanent Disability occurs, as such bonuses are
determined under Section 3(b) of this Agreement, and (iii) any shares
of Restricted Stock and Stock Options that have vested in accordance
with the provisions of the Award Agreements. Such pro rata portion of
the Bonus shall be determined by a multiplying a fraction (the
numerator of which shall be the
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237
number of days in the applicable fiscal year elapsed prior to the date
of death or Permanent Disability, as the case may be, and the
denominator of which shall be three hundred sixty-five (365)) by the
amount of the Bonus that would have been payable, if any, pursuant to
such Section 3(b), if Employee had remained employed under this
Agreement for the entire applicable fiscal year.
(b) Upon death or Permanent Disability of Employee, the Bonus,
if any, shall be paid when and as provided in Section 3(b) of this
Agreement. The other compensation to be paid pursuant to this Section 5
shall be paid, at the election of Employee or Employee's designated
beneficiary (who shall be his wife, unless he gives Employer written
notice of a different designation), either (i) in two (2) equal annual
installments paid within the two (2) year period beginning on the date
of such death or Permanent Disability, as the case may be, or (ii) in
one (1) lump sum paid within ninety (90) days after the date of such
death or Permanent Disability, as the case may be.
(c) Employee shall be entitled to no further compensation or
other benefits under this Agreement, except as to that portion of any
benefits accrued and earned by him hereunder up to and including the
date of such death or Permanent Disability.
(d) For purposes of this Section 5, Employee's Permanent
Disability shall be deemed to occur on the date after the first to
occur of (i) ninety (90) consecutive days, or (ii) one hundred eighty
(180) days cumulatively in any twelve (12) month period, of Employee's
inability to provide the services required hereunder of him due to
sickness or injury ("Permanent Disability").
6. Termination and Further Compensation.
(a) The employment of Employee under this Agreement, and the
term hereof, subject to Employee's rights set forth elsewhere herein,
may be terminated by Employer:
(i) on death or Permanent Disability of Employee, or
(ii) for cause at any time by action of the Board.
For purposes hereof, the term "cause" shall mean:
A. an intentional act of fraud,
embezzlement, theft or any other material violation
of law in connection with Employee's duties or in the
course of his employment with Employer;
B. intentional wrongful damage to material
assets of Employer;
C. intentional wrongful disclosure of
material confidential information of Employer;
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D. intentional wrongful engagement in any
competitive activity which would constitute a
material breach of the duty of loyalty; or
E. breach of any material term of this
Agreement.
No act, or failure, to act, on the part of Employee shall be
deemed "intentional", or provide the basis for termination for
cause, if it was due primarily to an error in judgment or
negligence without bad faith or reckless disregard, but shall
be deemed "intentional" only if done, or omitted to be done,
by Employee not in good faith and without reasonable belief
that his action or omission was in or not opposed to the best
interest of Employer. Failure to meet performance standards or
objectives of Employer shall not constitute cause for purposes
hereof. Further, in the event Employer terminates Employee for
"cause", Employer shall give Employee written notice as to the
specific circumstances giving rise to its decision to
terminate Employee for cause ("Notice"), and, Employee shall
be given the opportunity to respond, with counsel, to
Employer's decision and Employer's articulated circumstances,
such responses shall be before the Board of Directors of
Employer and shall take place within fourteen (14) days of
Employer's Notice. Any termination by reason of the foregoing
shall not be in limitation of any other right or remedy
Employer may have under this Agreement or otherwise. On any
termination of this Agreement, Employee shall be deemed to
have resigned from all offices and directorships held by
Employee in Employer and any subsidiaries and affiliates of
Employer.
(b) In the event of termination of this Agreement for any of
the reasons set forth in Section 6(a)(ii) hereof, Employee shall be
entitled to no further compensation or other benefits under this
Agreement, except as to (i) that portion of any unpaid Base
Compensation reduced by any and all payments made, or to be made, to
Employee pursuant to the Disability Policy and other benefits accrued
and earned by him hereunder up to and including the effective date of
such termination; and (ii) any of his shares of Restricted Stock and
Stock Options that have vested in accordance with the provisions of
Section 3(c) of this Agreement.
(c) In the event that Employee's employment is terminated
without cause during the Original Term of this Agreement or in the
event that the Original Term of this Agreement shall have expired and
shall not have been renewed and Employee thereupon ceases to be
employed by Employer for any reason other than termination of his
employment for cause, Employee shall be entitled to receive: (i) an
amount equal to his Base Compensation, and any other benefits due
Employee under Section 4 of this Agreement, for the nine (9) month
period immediately following such termination; (ii) the Bonus, if any,
applicable to the fiscal year in which such cessation of employment
occurs, as such Bonus is determined under Section 3(b) of this
Agreement but on a prorated basis calculated in the manner contemplated
by Section 5(a) of this Agreement; and (iii) all of his shares of
Restricted Stock awarded pursuant to Section 3(c) of this Agreement and
the
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Restricted Shares Agreement and Stock Options immediately fully vested,
and otherwise free of any forfeiture provisions or other restrictions
imposed under the Award Agreements except for any restrictions or
limitations imposed by applicable state and federal securities laws and
regulations. In the event that Employee's employment is terminated
without cause during a Renewal Term, Employee will be entitled to
receive all of the compensation and benefits provided for in the
immediately preceding sentence. Upon any such termination by Employer,
other than for "cause", Employee's obligations to Employer hereunder
shall terminate.
7. Reimbursement. Employer shall reimburse Employee or provide him with
an expense allowance during the term of this Agreement, for travel,
entertainment and other expenses reasonably and necessarily incurred by Employee
in performing services hereunder or, generally, the promotion of Employer's
business. Employee shall furnish such documentation with respect to
reimbursement to be paid under this Section 7 as Employer shall reasonably
request.
8. Covenants and Confidential Information.
(a) Employee acknowledges Employer's reliance and expectation
of Employee's continued commitment of performance of his duties and
responsibilities during the term of this Agreement. In light of such
reliance and expectation on the part of Employer, Employee agrees that
during the period beginning on the effective date of this Agreement and
ending eighteen (18) months after the termination of Employee's
employment for cause or Employee's resignation from employment with
Employer (except with respect to subsection (a)(iii), in which case
Employee agrees that at time beginning on the effective date of this
Agreement and thereafter), he shall not, directly or indirectly, do or
suffer any of the following:
(i) employ, assist in employing, or solicit for
employment any employee or officer of Employer or any of
Employer's affiliates or subsidiaries who was employed or
retained at any time during the one (1) year period preceding
the date on which Employee's employment with Employer is
terminated;
(ii) induce any person who is an employee or officer of
Employer or any of Employer's affiliates or subsidiaries to
terminate said relationship in such a manner which is not in
furtherance of Employer's interest; or
(iii) except in performing services hereunder, disclose,
divulge, discuss, copy or otherwise use or suffer to be used
in any manner, in competition with, or contrary to the
interests of, Employer or any of Employer's affiliates or
subsidiaries entities, the proprietary customer lists, limited
partner lists, research or data or other trade secrets of
Employer or any of Employer's affiliates or subsidiaries, it
being acknowledged by Employee that any such proprietary
information regarding the business of Employer and Employer's
affiliates or
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240
subsidiaries entities compiled or obtained by, or furnished
to, Employee while Employee shall have been employed by or
associated with Employer, and which has not been publicly
disclosed by Employer or which is otherwise not available in
the public domain, is confidential information and Employer's
property.
(b) Employee expressly agrees and understands that the remedy
at law for any breach by him of this Section 8 will be inadequate and
that the damages flowing from such breach are not readily susceptible
to being measured in monetary terms. Accordingly, it is acknowledged
that upon adequate proof of Employee's violation of any legally
enforceable provision of this Section 8, Employer shall be entitled to
immediate injunctive relief and may obtain a temporary order
restraining any threatened or further breach. Nothing in this Section 8
shall be deemed to limit Employer's remedies at law or in equity for
any breach by Employee of any of the provisions of this Section 8 which
may he pursued or availed of by Employer.
(c) Employee has carefully considered the nature and extent of
the restrictions upon him and the rights and remedies conferred upon
Employer under this Section 8, and hereby acknowledges and agrees that
the same are reasonable in time and territory, are designed to
eliminate competition which otherwise would be unfair to Employer, do
not stifle the inherent skill and experience of Employee, would not
operate as a bar to Employee's sole means of support, are fully
required to protect the legitimate interests of Employer and do not
confer a benefit upon Employer disproportionate to the detriment to
Employee.
9. Withholding Taxes. All payments to Employee shall be subject to
withholding on account of federal, state and local taxes as required by law. Any
amounts remitted by Employer to the appropriate taxing authorities as taxes
withheld by Employer from Employee on income realized by Employee with respect
to the vesting of his shares of Restricted Stock shall reduce the amounts
payable by Employer to Employee by way of compensation or otherwise. If any
particular payment required hereunder is insufficient to provide the amount of
such taxes required to be withheld, Employer may withhold such taxes from any
other payment due Employee. In the event all cash payments due Employee are
insufficient to provide the required amount of such withholding taxes, Employee,
within thirty (30) days of written notice from Employer, shall pay to Employer
the amount of such withholding taxes in excess of all cash payments due Employee
at the time such withholding is required to be made by Employer, provided,
however, the foregoing shall not be deemed to limit Employee's right to receive
loans from Employer to fund income tax obligations as set forth in Section 3 of
this Agreement.
10. No Conflicting Agreement. The parties hereto represent and warrant
to each other that they are not a party to any agreement, contract or
understanding, whether employment or otherwise, which would restrict or would
prohibit them from undertaking or performing in accordance with the terms and
conditions of this Agreement. Employer represents and covenants that its
entering into this Agreement has been duly authorized and ratified, and that it
has full
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241
authority to consummate the undertakings set forth herein including, without
limitation, the grant of the Restricted Stock and Stock Options to Employee.
11. Severable Provisions. The provisions of this Agreement are
severable and if any one or more provisions may be determined to be illegal or
otherwise unenforceable, in whole or in part, the remaining provisions and any
partially unenforceable provision to the extent enforceable in any jurisdiction
shall, nevertheless, be binding and enforceable.
12. Binding Agreement. The rights and obligations of Employer under
this Agreement shall inure to the benefit of, and shall be binding upon,
Employer and its successors and assigns, and the rights and obligations (other
than obligations to perform services) of Employee under this Agreement shall
inure to the benefit of, and shall be binding upon, Employee and his heirs,
personal representatives and estate. Employer agrees and acknowledges that the
services Employee is providing Employer are personal to Employer, and Employer
shall not have the right to assign this Agreement without Employee's written
consent.
13. Arbitration. Any controversy or claim arising out of or relating to
this Agreement, or the breach thereof, shall be settled by arbitration in
accordance with the Rules of the American Arbitration Association then
pertaining in the City of Columbus, Ohio, and judgment upon the award rendered
by the Arbitrator or Arbitrators may be entered in any Court having jurisdiction
thereof. The Arbitrator or Arbitrators shall be deemed to possess the powers to
issue mandatory orders and restraining orders in connection with such
arbitration; provided, however, that nothing in this Section 13 shall be
construed so as to deny Employer the right and power to seek and obtain
injunctive relief in a court of equity for any breach or threatened breach of
Employee of any of his covenants contained in Section 8(a) of this Agreement.
14. Notices. Any notice to be given under this Agreement shall be
personally delivered in writing or shall have been deemed duly given when
received after it is posted in the United States mail, postage prepaid,
registered or certified, return receipt requested, and if mailed to Employer,
shall be addressed to its principal place of business, attention: General
Counsel, and if mailed to Employee, shall be addressed to him at his home
address last known on the records of Employer, or at such other address or
addresses as either Employer or Employee may hereafter designate in writing to
the other.
15. Waiver. The failure of either party to enforce any provision or
provisions of this Agreement shall not in any way be construed as a waiver of
any such provision or provisions as to any future violations thereof, nor
prevent that party thereafter from enforcing each and every other provision of
this Agreement. The rights granted the parties herein are cumulative and the
waiver of any single remedy shall not constitute a waiver of such party's right
to assert all other legal remedies available to it under the circumstances.
16. Amendment. This Agreement supersedes all prior agreements and
understandings between the parties and may not be modified or terminated orally.
No modification, termination
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242
or attempted waiver shall be valid unless in writing and signed by the party
against whom the same it is sought to be enforced.
17. Governing Law. This Agreement shall be governed by and construed
according to the laws of the State of Ohio.
18. Captions and Section Headings. Captions and section headings used
herein are for convenience and are not a part of this Agreement and shall not be
used in construing it.
19. Miscellaneous. Where necessary or appropriate to the meaning
hereof, the singular and plural shall be deemed to include each other, and the
masculine and neuter shall be deemed to include each other.
IN WITNESS WHEREOF, the parties have executed this Employment Agreement
on the day and year first set forth above.
"EMPLOYER"
ATTEST: LEXFORD PROPERTIES, INC.
By: /s/ Michele R. Souder
----------------------------------
MICHELE R. SOUDER,
Chief Financial Officer
"EMPLOYEE"
/s/ James Alexander
----------------------------------
JAMES ALEXANDER
10
243
RESTRICTED SHARES AGREEMENT (STOCK AWARD)
FOR JAMES ALEXANDER
WHEREAS, James Alexander ("Employee") and Lexford Properties, Inc.
("Lexford"), a subsidiary of Cardinal Realty Services, Inc. ("Company"), have
heretofore entered into that certain Employment Agreement dated as of January 1,
1997, as amended (as the same may be further amended, restated, amended and
restated, modified, or supplemented from time to time after the date hereof ), (
the "Employment Agreement);
WHEREAS, Company has established its Executive Deferred Compensation
Plan dated as of April 18, 1996 ("Deferred Compensation Plan") and Employee is
entitled to participate in the Deferred Compensation Plan in accordance with its
terms;
WHEREAS, pursuant to the Plan, the Company has further entered into
that certain Executive Deferred Compensation Rabbi Trust Agreement (the "Trust")
with The Provident Bank, a state-chartered bank, as trustee thereunder
("Trustee");
WHEREAS, in accordance with the terms of the Deferred Compensation
Plan, Employee has elected to cause the five thousand (5,000) shares of the
Company's common stock, without par value (the "Shares"), otherwise issuable to
him under the terms of the Restricted Shares Agreement (Stock Award) to be
instead issued to the Trustee for Employee's benefit to be held by the Trustee
in accordance with the terms of the Trust;
NOW, THEREFORE, pursuant to the Deferred Compensation Plan effective as
of January 1, 1997 (the "Date of Grant"), the Company grants to Trustee for
Employee's benefit under the terms of the Trust, the Shares subject to the
terms, conditions, limitations and restrictions hereinafter set forth. Terms
used herein and not otherwise defined shall have the meanings assigned to them
in the Deferred Compensation Plan.
1. Issuance of Shares. The Shares covered by this agreement are shares
of Other Restricted Stock within the meaning of the Deferred Compensation Plan
and shall be fully paid and nonassessable and shall be represented by a
certificate(s) registered in the name of the Trustee and bearing a legend
referring to the restrictions hereinafter set forth.
2. Restrictions on Transfer of the Shares. The Shares subject to this
agreement may not be transferred, sold, pledged, exchanged, assigned or
otherwise encumbered or disposed of, except to the Company, and shall remain the
sole property of and subject to the Trust until they have become nonforfeitable
in accordance with Section 3 hereof and for so long thereafter as may be
required under the terms of the Deferred Compensation Plan and the Trust. Any
purported transfer, encumbrance or other disposition of the Shares covered by
this agreement that is in violation of this Section 2 shall be null and void,
and the other party to any such purported transaction shall not obtain any
rights to or interest in the Shares covered by this agreement. The Company may
waive the
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244
restrictions set forth in this Section 2 (but not in the Deferred Compensation
Plan or the Trust) with respect to all or any portion of the Shares covered by
this agreement.
3. Vesting of the Shares.
(a) One-third of the Shares covered by this agreement, shall
become nonforfeitable on the third, fourth and fifth anniversaries of
the Date of Grant (so that 100% of the Shares will be nonforfeitable on
the fifth anniversary of the Date of Grant), subject to the Employee
remaining in the continuous employ of the Company or a subsidiary
during the applicable vesting period. For the purposes of this
agreement: "subsidiary" shall mean a corporation, partnership, joint
venture, unincorporated association or other entity in which the
Company has a direct or indirect ownership or other equity interest of
more than fifty percent (50%); the continuous employment of the
Employee with the Company or a subsidiary shall not be deemed to have
been interrupted, and the Employee shall not be deemed to have ceased
to be an employee of the Company or a subsidiary, by reason of (i) the
transfer of his employment among the Company and its subsidiaries or
(ii) a leave of absence approved by the Committee for illness, military
or governmental service or other reasons.
(b) Notwithstanding the vesting provisions of Section 3(a)
hereof, in the event that Employee's employment with the Company
ceases, any Shares not vested will be forfeited.
(c) Notwithstanding the vesting provisions of Sections 3(a)
and (b) hereof, in the event that Employee's employment ceases by
reason of (i) Employee's death, (ii) Employee's Permanent Disability
(as defined in the Employment Agreement) or (iii) the Company's
termination of Employee's employment without "cause" (as defined in the
Employment Agreement) or in the event the Employment Agreement is not
renewed and the Company terminates Employee's employment with the
Company for any reason other than "cause", all of the Shares covered by
this agreement shall become immediately nonforfeitable.
4. Forfeiture of the Shares. In the event of a forfeiture, the
certificates representing all of the Shares covered by this agreement that have
not become nonforfeitable in accordance with Section 3 hereof shall be cancelled
and such Shares shall be deemed to be and to have become authorized but unissued
shares of common stock, without par value, of the Company.
5. Dividend, Voting and Other Rights. So long as the Trustee continues
to hold the Shares in accordance with the Trust, all dividend, voting and other
rights will be exercised and enjoyed by the Trustee in accordance with the terms
of the Trust for the benefit of Employee, subject, however, to the terms of
Section 4 and this Section 5. In the event that for any reason prior to vesting
of any of the Shares in accordance with Section 3 above, the Deferred
Compensation Plan and the Trust shall no longer remain in effect or the Trustee
shall have otherwise ceased to hold the Shares for Employee's benefit, the
Employee shall, at all times prior to forfeiture, have all of the rights of a
shareholder with respect to the Shares covered by this agreement, including the
right to vote the Shares and receive any dividends that may be paid thereon;
provided, however, that (a) any
2
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245
cash dividends and other cash distributions that may be paid on any Shares
covered by this agreement that have not become nonforfeitable in accordance with
Section 3 hereof shall be automatically sequestered and invested in an
interest-bearing bank account, which shall be subject to the same restrictions
hereunder as the forfeitable Shares on which the cash dividends or other cash
distributions are paid, and (b) any additional Shares that the Employee may
become entitled to receive pursuant to a share dividend or a merger or
reorganization in which the Company is the surviving corporation or any other
change in the capital structure of the Company shall be subject to the same
restrictions as the Shares covered by this agreement.
6. Retention of Share Certificate(s) by Company. The certificate(s)
representing the Shares covered by this agreement shall be held in custody by
the Company, together with a stock power endorsed in blank by the Trustee with
respect thereto, until those shares have become nonforfeitable in accordance
with Section 3 hereof.
7. Adjustments. The Committee shall make any adjustments in the number
or kind of shares of stock or other securities covered by this agreement that
the Committee, in its discretion, may determine to be equitably required to
prevent any dilution or expansion of the Employee's beneficial rights under this
agreement that otherwise would result from any (a) stock dividend, stock split,
combination of shares, recapitalization or other change in the capital structure
of the Company, (b) merger, consolidation, separation, reorganization or partial
or complete liquidation involving the Company or (c) other transaction or event
having an effect similar to any of those referred to in Section 7(a) or 7(b)
hereof. Furthermore, in the event that any transaction or event described or
referred to in the immediately preceding sentence shall occur, the Committee may
provide in substitution of any or all of the Employee's beneficial rights under
this agreement such alternative consideration as the Committee, in its
discretion, may determine to be equitable under the circumstances.
8. Withholding Taxes. If the Company shall be required to withhold any
federal, state, local or foreign tax in connection with any issuance of
restricted or unrestricted Shares or other securities pursuant to this
agreement, the Employee shall pay the tax or make provisions that are
satisfactory to the Company for the payment thereof.
9. Right to Terminate Employment. No provision of this agreement shall
limit in any way whatsoever any right that the Company or a subsidiary may
otherwise have to terminate the employment of the Employee at any time.
10. Relation to Other Benefits. Any economic or other benefit to the
Employee under this agreement or the Deferred Compensation Plan shall not be
taken into account in determining any benefits to which the Employee may be
entitled under any profit-sharing, retirement or other benefit or compensation
plan maintained by the Company or a subsidiary and shall not affect the amount
of any life insurance coverage available to any beneficiary under any life
insurance plan covering employees of the Company or a subsidiary.
3
<PAGE>
246
11. Severability. In the event that one or more of the provisions of
this agreement shall be invalidated for any reason by a court of competent
jurisdiction, any provision so invalidated shall be deemed to be separable from
the other provisions hereof, and the remaining provisions hereof shall continue
to be valid and fully enforceable.
12. Governing Law. This agreement is made under, and shall be construed
in accordance with, the laws of the State of Ohio.
This agreement is executed by the Company as of the first day of
January, 1997.
CARDINAL REALTY SERVICES, INC.
By: /s/ John B. Bartling, Jr.
-------------------------------
John B. Bartling, Jr.,
President
and Chief Executive Officer
The undersigned Employee hereby acknowledges receipt of an executed
original of this agreement and accepts the beneficial, deferred right to receive
the Shares or other securities covered hereby, subject to the terms and
conditions of the Deferred Compensation Plan and the terms and conditions
hereinabove set forth.
Employee acknowledges that he has been advised that the Shares covered
by this agreement have not been registered under the Securities Act of 1933 and
agrees that he will not make any disposition of such shares unless either (a)
such Shares have been registered under said Act or (b) an exemption from the
registration provisions of said Act is applicable to the Trustee's or Employee's
proposed disposition of such Shares, as the case may be. Employee understands
that the certificates for such Shares may bear a legend substantially as
follows:
The shares evidenced by this Certificate have not been registered
under the Securities Act of 1933. Such shares may not be sold or
otherwise transferred until the same have been registered under said
Act or until the Company shall have received an opinion of legal
counsel or a copy of a letter from the staff of the Division of
Corporation Finance of the Securities and Exchange Commission, in
either case satisfactory to the Company, that such shares may legally
be sold or otherwise transferred without such registration.
/s/ James Alexander
-----------------------------------
JAMES ALEXANDER
Date: January 1, 1997
4
247
DEFERRED SHARES AGREEMENT
FOR JAMES ALEXANDER
WHEREAS, James Alexander ("Employee") and Lexford Properties, Inc.
("Lexford"), a subsidiary of Cardinal Realty Services, Inc. ("Company"), have
heretofore entered into that certain Employment Agreement dated as of January 1,
1997 (as the same may be amended, restated, amended and restated, modified or
supplemented from time to time from and after the date hereof, the "Employment
Agreement");
WHEREAS, pursuant to the terms of the Employment Agreement, Lexford
agreed to cause the Company to enter into this Deferred Shares Agreement with
Employee;
WHEREAS, Company has established its Executive Deferred Compensation
Plan dated as of April 18, 1996 ("Deferred Compensation Plan") and Employee is
entitled to participate in the Deferred Compensation Plan in accordance with its
terms;
WHEREAS, pursuant to the Plan, the Company has further entered into
that certain Executive Deferred Compensation Rabbi Trust Agreement (the "Trust")
with The Provident Bank, a state-chartered bank, as trustee thereunder
("Trustee");
WHEREAS, in accordance with the terms of the Deferred Compensation
Plan, Employee has elected to cause that number of shares of the Company's
common stock, without par value (the "Shares"), if any, which might have
otherwise become issuable to him as the "Stock Bonus" as defined in, and
pursuant to the terms of, Section 3(b) of the Employment Agreement and this
Deferred Shares Agreement to be instead issued to the Trustee for Employee's
benefit to be held by the Trustee in accordance with the terms of the Trust;
NOW, THEREFORE, pursuant to the Deferred Compensation Plan, effective
as of January 1, 1997, the Company grants to Trustee for Employee's benefit
under the terms of the Trust, the right to receive the Shares when and as
issuable in accordance with the terms of the Employment Agreement and this
agreement subject to the terms, conditions, limitations and restrictions
hereinafter set forth. Terms used herein and not otherwise defined shall have
the meanings assigned to them in the Deferred Compensation Plan or the
Employment Agreement, as the case may be.
1. Vesting of Awards. The Trustee's right to receive the Shares covered
by this Agreement (any such Shares which are contemplated for future issuance to
Trustee for the benefit of Employee hereunder being hereinafter collectively
referred to as the "Deferred Shares") is conditioned upon the Employee's
entitlement to a Stock Bonus as well as Employee remaining in the continuous
employ of Lexford, the Company or another subsidiary of the Company as follows:
<PAGE>
248
(a) The dollar amount of the Stock Bonus will be determined on the same
basis as the Cash Bonus pursuant to Section 3(b)(i) of the Employment Agreement
(including the limitations set forth in the partial-year provision of Section
6(c) of the Employment Agreement), except that the dollar value of the Stock
Bonus will equal 2/3 of the value of the Cash Bonus.
(b) The number of Shares issuable to Trustee will be determined by
dividing (A) the dollar value of the Deferred Shares determined in accordance
with Section 1(a) by (B) the closing price of the Company's Common Stock on the
Nasdaq National Market System, or if the Company's Common Stock is not listed or
admitted to trading in such system, the principal securities exchange on which
the Common Stock is listed or admitted to trading on the last trading date in
the period for which the dollar value of the Deferred Shares are calculated
(i.e. December 31 or the last closing price for the Common Stock immediately
preceding the date Employee ceases employment with the Company). Any Shares
which Trustee is entitled to receive from the Company shall be issued within
thirty (30) days after Employee's entitlement, if any, to the Stock Bonus is
calculated from the applicable final audited year end financial statements of
the Company or the final year end financial statements of Lexford, as
applicable.
(c) One-third of the Shares covered by this Agreement, shall become
nonforfeitable on each of the first, second and third January 1 following the
date of issuance pursuant to Section 1(b) (so that 100% of the Shares of any
particular Stock Bonus will be nonforfeitable on the third January 1 following
the date of issuance thereof), subject to the Employee remaining in the
continuous employ of Lexford, the Company or another subsidiary of the Company.
Notwithstanding the immediately preceding sentence, in the event of Employee's
death or Permanent Disability (as defined hereinbelow), all of the Shares issued
to the Trustee (as well as any Shares to be thereafter issued pursuant to
Section 1(d) hereof) will immediately become nonforfeitable. For the purposes of
this Agreement: "subsidiary" shall mean a corporation, partnership, limited
liability company, joint venture, unincorporated association or other entity in
which the Company has a direct or indirect ownership or other equity interest of
more than fifty percent (50%); the continuous employment of the Employee with
the Company, Lexford or another subsidiary of the Company shall not be deemed to
have been interrupted, and the Employee shall not be deemed to have ceased to be
an employee of the Company or a subsidiary, by reason of (i) the transfer of his
employment among Lexford, the Company or other subsidiaries of the Company or
(ii) a leave of absence approved by the Compensation Committee of the Company's
Board of Directors (the "Committee") for illness, military or governmental
service or other reasons.
(d) In the event of Employee's death or Permanent Disability (as
defined hereinbelow) during the term of the Employment Agreement, the Trustee,
Employee or his estate, as the case may be (to be determined pursuant to the
provisions of the Deferred Compensation Plan then in effect), shall be entitled
to receive a pro rata portion of the Shares, if any, applicable to the fiscal
year in which such death or Permanent Disability occurs. Such pro rata portion
of the Shares shall be determined by a multiplying a fraction (the numerator of
which shall be the number of days in the applicable fiscal year elapsed prior to
the date of death or Permanent
-2-
<PAGE>
249
Disability, as the case may be, and the denominator of which shall be three
hundred sixty-five (365)) by the dollar value, if any, of the Deferred Shares
that would have been issuable hereunder if Employee had remained employed under
the Employment Agreement for the entire applicable fiscal year.
(e) Following such death or Permanent Disability of Employee, the
Shares, if any, shall be issued when and as provided in Section 1(b) of this
Agreement.
(f) For purposes of this Section 1, Employee's Permanent Disability
shall be deemed to occur on the date after the first to occur of (i) ninety (90)
consecutive days, or (ii) one hundred eighty (180) days cumulatively in any
twelve (12) month period, of Employee's inability to provide the services
required hereunder of him due to sickness or injury ("Permanent Disability").
(g) In the event the Company terminates Employee's employment for
"cause" (as defined in the Employment Agreement), all Shares which have not yet
become nonforfeitable pursuant to Section 1(c) hereof shall be immediately
forfeited and Employee shall be entitled to no further benefits under this
Agreement.
(h) In the event that Employee's employment is terminated without cause
during the Original Term or any Renewal Term of the Employment Agreement or in
the event that the Original Term or any Renewal Term of the Employment Agreement
shall have expired and shall not have been renewed and Employee thereupon ceases
to be employed by the Company, the Trustee or Employee, as the case may be (to
be determined pursuant to the provisions of the Deferred Compensation Plan as
then in effect) shall be entitled to receive only that number of Shares which
shall have become nonforfeitable under Section 1(c) of this Agreement and all
Shares which have not yet become nonforfeitable shall be forfeited.
2. Restrictions on Transfer. The right to receive the Shares covered by
this Agreement (in trust under the Trust Agreement or otherwise) may not be
transferred, sold, pledged, exchanged, assigned or otherwise encumbered or
disposed of by the Employee, except as provided under the terms of the Deferred
Compensation Plan and the Trust. Any purported transfer, encumbrance or other
disposition that is in violation of this Section 2 shall be null and void. When
and as permitted by the Deferred Compensation Plan, the Committee may waive the
restrictions set forth in this Section 2 with respect to all or any portion of
the Common Shares covered by this Agreement.
3. Dividend, Voting and Other Rights. Unless and until thirty (30) days
after Percentage Increase in the Net Income attributable to Lexford property
management is finally determined on account of any fiscal year of the Company
contemplated hereby and the Shares covered by this Agreement are issued in
accordance with the terms of Section 1 of this Agreement, no such Shares shall
be deemed to be issued or outstanding and neither the Trustee nor the Employee
shall have any rights of ownership in such Shares nor shall have any right to
vote them or to receive any dividends or other distributions thereon. From and
after such time as any of the
-3-
<PAGE>
250
Shares shall have been issued to the Trustee in accordance with the terms of
this Agreement and the Deferred Compensation Plan and the Trust, the Trustee
shall be entitled to such dividend voting and other rights in respect of such
shares as is provided in the Deferred Compensation Plan and the Trust so long as
the Trustee shall continue to hold such Shares in trust for the benefit of the
employee.
4. Adjustments. The Committee shall make any adjustments in the number
or kind of shares of stock or other securities covered by this Agreement that
the Committee may determine to be equitably required to prevent any dilution or
expansion of the Employee's rights under this Agreement that otherwise would
result from any (a) stock dividend, stock split, combination of shares,
recapitalization or other change in the capital structure of the Company, (b)
merger, consolidation, separation, reorganization or partial or complete
liquidation involving the Company or (c) other transaction or event having an
effect similar to any of those referred to in Section 4(a) or 4(b) hereof.
Furthermore, in the event that any transaction or event described or referred to
in the immediately preceding sentence shall occur, the Committee may provide in
substitution of any or all of the Employee's rights under this Agreement such
alternative consideration as the Committee may determine in good faith to be
equitable under the circumstances.
5. Withholding Taxes. If the Company shall be required to withhold any
federal, state, local or foreign tax in connection with any issuance of the
Common Shares or other securities pursuant to this Agreement, the Employee shall
pay the tax or make provisions that are satisfactory to the Company for the
payment thereof.
6. Right to Terminate Employment. No provision of this Agreement shall
limit in any way whatsoever any right that the Company or a subsidiary may
otherwise have to terminate the employment of the Employee at any time.
7. Relation to Other Benefits. Any economic or other benefit to the
Employee under this Agreement or the Plan shall not be taken into account in
determining any benefits to which the Employee may be entitled under any
profit-sharing, retirement or other benefit or compensation plan maintained by
the Company or a subsidiary and shall not affect the amount of any life
insurance coverage available to any beneficiary under any life insurance plan
covering employees of the Company or a subsidiary.
8. Severability. In the event that one or more of the provisions of
this Agreement shall be invalidated for any reason by a court of competent
jurisdiction, any provision so invalidated shall be deemed to be separable from
the other provisions hereof, and the remaining provisions hereof shall continue
to be valid and fully enforceable.
9. Governing Law. This Agreement is made under, and shall be construed
in accordance with, the laws of the State of Ohio.
-4-
<PAGE>
251
This Agreement is executed by the Company as of the first day of
January, 1997.
CARDINAL REALTY SERVICES, INC.
By: /s/ John B. Bartling, Jr.
-----------------------------------
John B. Bartling, Jr.,
President and Chief Executive Officer
-5-
<PAGE>
252
The undersigned Employee hereby acknowledges receipt of an executed
original of this Agreement and accepts the beneficial, deferred right to receive
the Shares or other securities covered hereby, subject to the terms and
conditions of the Deferred Compensation Plan and the terms and conditions
hereinabove set forth.
Employee acknowledges that he has been advised that the shares of
Shares to be issued pursuant to this Agreement will not have been registered
under the Securities Act of 1933 and agrees that he will not make any
disposition of such shares unless either (a) such shares have been registered
under said Act or (b) an exemption from the registration provisions of said Act
is applicable to the Trustee's or Employee's proposed disposition of such
shares, as the case may be. Employee understands that the certificates for such
shares may bear a legend substantially as follows:
The shares evidenced by this Certificate have not been
registered under the Securities Act of 1933. Such shares may
not be sold or otherwise transferred until the same have been
registered under said Act or until the Company shall have
received an opinion of legal counsel or a copy of a letter
from the staff of the Division of Corporation Finance of the
Securities and Exchange Commission, in either case
satisfactory to the Company, that such shares may legally be
sold or otherwise transferred without such registration.
/s/ James Alexander
--------------------------------------
James Alexander
Date: January 1, 1997
-6-
253
AWARD AGREEMENT
WHEREAS, Michele R. Souder (the "Employee") is employed by Cardinal
Realty Services, Inc. (the "Company");
WHEREAS, the Company has determined that it is in the best interest of
the Company to issue 740 shares of the Company's Common Stock, without par value
(the "Shares") in lieu of cash compensation to be paid to the Employee during
the Company's 1997 fiscal year;
WHEREAS, pursuant to the terms of this Award Agreement, the Company
grants to Employee the Shares subject to the terms, conditions, limitations and
restrictions hereinafter set forth.
1. Issuance of Shares. The Shares to be issued hereunder shall be
issued in lieu of cash compensation otherwise payable to Employee during the
Company's 1997 fiscal year and shall be earned ratably over the course of the
Company's 1997 fiscal year for so long as Employee is entitled to receive
regular payments of base compensation. Pursuant to Employee's written election,
the Shares to be issued hereunder will be issued for Employee's benefit to The
Provident Bank, a state chartered bank ("Trustee"), as trustee under the
Company's Executive Deferred Rabbi Trust Agreement ("Trust"). The Trustee will
hold the Shares pursuant to the provisions of the Trust and Employee's
beneficial ownership of the Shares shall be subject to the terms and provisions
of the Trust as well as the Company's Executive Deferred Compensation Plan dated
as of April 18, 1996. Once earned, the Shares shall be issued to Trustee for
Employee's benefit on a quarterly basis, promptly following the end of each
calendar quarter on account of the immediately preceding calendar quarter.
Accordingly, so long as Employee remains in the employ of Company for the entire
calendar quarter in question, Employee will be entitled to receive 185 Shares on
account of each calendar quarter during the Company's 1997 fiscal year. In the
event that Employee's employment with Company or any subsidiary of Company
terminates during the Company's 1997 fiscal year, then in such event Employee
shall be entitled to that number of Shares earned on a pro-rated basis during
the calendar quarter in which termination of employment occurs, determined by
multiplying the sum of 185 Shares by a fraction, the numerator of which will
equal the number of calendar days during which Employee remained in the employ
of the Company during such calendar quarter and the denominator of which will
equal the total number of calendar days comprising such calendar quarter.
2. Value of the Shares. The Shares to be issued hereunder shall be
valued at $20-5/8, the closing price on December 31, 1996.
3. Withholding Taxes. The Company shall have the right to withhold cash
compensation from Employee to provide for the federal, state, local or foreign
tax, if any, withholding obligations of the Company, in connection with the
issuance of the Shares.
4. Right to Terminate Employment. No provision of this Award Agreement
shall limit in any way whatsoever any right that the Company or a subsidiary may
otherwise have to terminate the employment of Employee at any time.
<PAGE>
254
5. Severability. In the event that one or more of the provisions of
this Award Agreement shall be invalidated for any reason by a court of competent
jurisdiction, any provision so invalidated shall be deemed to be separable from
the other provisions hereof, and the remaining provisions hereof shall continue
to be valid and fully enforceable.
6. Governing Law. This Award Agreement is made under, and shall be
construed in accordance with, the laws of the State of Ohio.
This Award Agreement is executed by the Company as of the 30th day of
June, 1997, so as to be effective as of the 1st day of January, 1997.
CARDINAL REALTY SERVICES, INC.
By: /s/ John B. Bartling, Jr.
-----------------------------
John B. Bartling, Jr.,
President and
Chief Executive Officer
2
<PAGE>
255
The undersigned Employee hereby acknowledges receipt of an executed
original of this Award Agreement and accepts the beneficial, deferred right to
receive the Shares covered hereby, subject to the terms and conditions
hereinabove set forth.
Employee acknowledges that she has been advised that the Shares covered
by this Agreement have not been registered under the Securities Act of 1933, as
amended, and agrees that she will not make any disposition of such Shares unless
either (a) such Shares have been registered under said Act or (b) an exemption
from the registration provisions of said Act is applicable to Employee's
proposed disposition of such Shares, as the case may be. Employee understands
that the certificates for such Shares may bear a legend substantially as
follows:
The shares evidenced by this Certificate have not been registered under
the Securities Act of 1933, as amended. Such shares may not be sold or
otherwise transferred until the same have been registered under said
Act or until the Company shall have received an opinion of legal
counsel or a copy of a letter from the staff of the Division of
Corporate Finance of the Securities and Exchange Commission, in either
case satisfactory to the Company, that such Shares may legally be sold
or otherwise transferred without such registration.
/s/ Michele R. Souder
---------------------------
MICHELE R. SOUDER
Date: June 30, 1997
Effective as of January 1, 1997
3
256
AWARD AGREEMENT
WHEREAS, Ronald P. Koegler (the "Employee") is employed by Cardinal
Realty Services, Inc. (the "Company");
WHEREAS, the Company has determined that it is in the best interest of
the Company to issue 485 shares of the Company's Common Stock, without par value
(the "Shares") in lieu of cash compensation to be paid to the Employee during
the Company's 1997 fiscal year;
WHEREAS, pursuant to the terms of this Award Agreement, the Company
grants to Employee the Shares subject to the terms, conditions, limitations and
restrictions hereinafter set forth.
1. Issuance of Shares. The Shares to be issued hereunder shall be
issued in lieu of cash compensation otherwise payable to Employee during the
Company's 1997 fiscal year and shall be earned ratably over the course of the
Company's 1997 fiscal year for so long as Employee is entitled to receive
regular payments of base compensation. Pursuant to Employee's written election,
the Shares to be issued hereunder will be issued for Employee's benefit to The
Provident Bank, a state chartered bank ("Trustee"), as trustee under the
Company's Executive Deferred Rabbi Trust Agreement ("Trust"). The Trustee will
hold the Shares pursuant to the provisions of the Trust and Employee's
beneficial ownership of the Shares shall be subject to the terms and provisions
of the Trust as well as the Company's Executive Deferred Compensation Plan dated
as of April 18, 1996. Once earned, the Shares shall be issued to Trustee for
Employee's benefit on a quarterly basis, promptly following the end of each
calendar quarter on account of the immediately preceding calendar quarter.
Accordingly, so long as Employee remains in the employ of Company for the entire
calendar quarter in question, Employee will be entitled to receive 121.25 Shares
on account of each calendar quarter during the Company's 1997 fiscal year. In
the event that Employee's employment with Company or any subsidiary of Company
terminates during the Company's 1997 fiscal year, then in such event Employee
shall be entitled to that number of Shares earned on a pro-rated basis during
the calendar quarter in which termination of employment occurs, determined by
multiplying the sum of 121.25 Shares by a fraction, the numerator of which will
equal the number of calendar days during which Employee remained in the employ
of the Company during such calendar quarter and the denominator of which will
equal the total number of calendar days comprising such calendar quarter.
2. Value of the Shares. The Shares to be issued hereunder shall be
valued at $20-5/8, the closing price on December 31, 1996.
3. Withholding Taxes. The Company shall have the right to withhold cash
compensation from Employee to provide for the federal, state, local or foreign
tax, if any, withholding obligations of the Company, in connection with the
issuance of the Shares.
4. Right to Terminate Employment. No provision of this Award Agreement
shall limit in any way whatsoever any right that the Company or a subsidiary may
otherwise have to terminate the employment of Employee at any time.
<PAGE>
257
5. Severability. In the event that one or more of the provisions of
this Award Agreement shall be invalidated for any reason by a court of competent
jurisdiction, any provision so invalidated shall be deemed to be separable from
the other provisions hereof, and the remaining provisions hereof shall continue
to be valid and fully enforceable.
6. Governing Law. This Award Agreement is made under, and shall be
construed in accordance with, the laws of the State of Ohio.
This Award Agreement is executed by the Company as of the 30th day of
June, 1997, so as to be effective as of the 1st day of January, 1997.
CARDINAL REALTY SERVICES, INC.
By: /s/ John B. Bartling, Jr.
----------------------------------
John B. Bartling, Jr.,
President and
Chief Executive Officer
2
<PAGE>
258
The undersigned Employee hereby acknowledges receipt of an executed
original of this Award Agreement and accepts the beneficial, deferred right to
receive the Shares covered hereby, subject to the terms and conditions
hereinabove set forth.
Employee acknowledges that he has been advised that the Shares covered
by this Agreement have not been registered under the Securities Act of 1933, as
amended, and agrees that he will not make any disposition of such Shares unless
either (a) such Shares have been registered under said Act or (b) an exemption
from the registration provisions of said Act is applicable to Employee's
proposed disposition of such Shares, as the case may be. Employee understands
that the certificates for such Shares may bear a legend substantially as
follows:
The shares evidenced by this Certificate have not been registered under
the Securities Act of 1933, as amended. Such shares may not be sold or
otherwise transferred until the same have been registered under said
Act or until the Company shall have received an opinion of legal
counsel or a copy of a letter from the staff of the Division of
Corporate Finance of the Securities and Exchange Commission, in either
case satisfactory to the Company, that such Shares may legally be sold
or otherwise transferred without such registration.
/s/ Ronald P. Koegler
---------------------
RONALD P. KOEGLER
Date: June 30, 1997
Effective as of January 1, 1997
3
259
EXHIBIT 5.1
July 3, 1997
Board of Directors
Cardinal Realty Services, Inc.
6954 Americana Parkway
Reynoldsburg, Ohio 43068
Gentlemen:
Cardinal Realty Services, Inc., an Ohio corporation (the "Company"),
intends to file with the Securities and Exchange Commission under the Securities
Act of 1933, as amended, a Registration Statement on Form S-8 (the "Registration
Statement") with respect to 435,123 shares (the "Shares") of the Company's
common stock, without par value (the "Common Stock"), to be issued from time to
time pursuant to the Amended and Restated 1992 Incentive Equity Plan of Cardinal
Realty Services, Inc. (the "Incentive Equity Plan"), the Non-Employee Director
Restricted Stock Plan ("Director Plan"), Employment Agreements and Award
Agreements between the Company and each of Messrs. Bartling, Thompson, Selid and
Alexander and Leslie Fox identified in the Registration Statement (the
"Employment Agreements"), the Supplemental Letter to the Employment Agreement of
Patrick M. Holder, between the Company and Mr. Holder identified in the
Registration Statement (the "Letter Agreement"), the Restricted Stock Award
Agreements between the Company and Joseph E. Madigan identified in the
Registration Statement and the Award Agreements between the Company and Mr.
Koegler and Ms. Souder identified in the Registration Statement (the "Award
Agreements"). Capitalized terms not defined in this letter have the meanings
given to them in the Registration Statement.
You have requested our opinion in connection with the Company's filing of
the Registration Statement. In this connection, we have examined and relied upon
originals or copies, certified or otherwise identified to our satisfaction as
being true copies, of all such records of the Company, all such agreements,
certificates of officers of the Company and others, and such other documents,
certificates and corporate or other records as we have deemed necessary as a
basis for the opinions expressed in this letter, including, without limitation,
the Company's Restated Articles of Incorporation, and the Registration
Statement.
In our examination, we have assumed the genuineness of all signatures,
the legal capacity of all natural persons, the authenticity of all documents
submitted to us as originals and the conformity to authentic original documents
of all documents submitted to us as certified or photostatic copies.
<PAGE>
260
We have investigated such questions of law for the purpose of rendering
the opinions in this letter as we have deemed necessary. We express no opinion
in this letter concerning any law other than the General Corporation Law of the
State of Ohio.
We have assumed the Company will remain in good standing as an Ohio
corporation at all times when shares of Common Stock are issued pursuant to
terms of the Incentive Equity Plan, the Director Plan, the Employment
Agreements, the Letter Agreement and the Award Agreements.
On the basis of and in reliance on the foregoing, we are of the opinion
that:
(1) The Shares of the Common Stock to be issued pursuant to the
Incentive Equity Plan, the Director Plan, the Employment
Agreements, the Letter Agreement and the Award Agreements,
respectively, when and if issued in accordance with the terms
of the Incentive Equity Plan, the Director Plan, the
Employment Agreements, the Letter Agreement and the Award
Agreements, respectively will be legally issued, fully paid
and nonassessable.
(2) The Shares of the Common Stock received pursuant to the
Incentive Equity Plan, the Director Plan, the Employment
Agreements, the Letter Agreement and the Award Agreements,
respectively have been legally issued and are fully paid and
nonassessable.
The opinion in this letter is rendered only to the Company in
connection with the filing of the Registration Statement. We consent to the
filing of this letter as an exhibit to the Registration Statement. The opinion
may not be relied upon by the Company for any other purpose. This letter may not
be paraphrased, quoted or summarized, nor may it be duplicated or reproduced in
part.
Very truly yours,
/s/ BENESCH, FRIEDLANDER,
COPLAN & ARONOFF LLP
-----------------------------
BENESCH, FRIEDLANDER,
COPLAN & ARONOFF LLP
261
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement on Form S-8 pertaining to the Amended and Restated
1992 Incentive Equity Plan of Cardinal Realty Services, Inc., Non-Employee
Director Restricted Stock Plan, Employment Agreements and Award Agreements
Between the Company and Each of John B. Bartling, Jr., Mark D. Thompson, Paul R.
Selid, James D. Alexander, and Leslie B. Fox, Supplemental Letter to Employment
Agreement of Patrick M. Holder Between the Company and Mr. Holder, Award
Agreements Between the Company and Joseph E. Madigan and Award Agreements
Between the Company and Ronald P. Koegler and Michele R. Souder, and to the
incorporation by reference therein of our report dated March 6, 1997, with
respect to the consolidated financial statements and schedules of Cardinal
Realty Services, Inc. included in its Annual Report (Form 10-K) for the year
ended December 31, 1996, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
------------------------
ERNST & YOUNG LLP
Chicago, Illinois
June 26, 1997
