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RESTRICTED SHARES AGREEMENT (MARKET CAP)
FOR XXXX X. XXXXX
WHEREAS, Xxxx X. Xxxxx ("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
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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.
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(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
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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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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/ Xxxx X. Xxxxxxxx, Xx.
-------------------------------------
XXXX X. XXXXXXXX, XX., President
and Chief Executive Officer
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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/ Xxxx X. Xxxxx
-----------------------------------
XXXX X. XXXXX
Date: April 15, 1996
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