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EMPLOYMENT AGREEMENT
BETWEEN CARDINAL REALTY SERVICES, INC.
AND
XXXX X. XXXXXXXX
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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
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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 Xxxx X. Xxxxxxxx ("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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(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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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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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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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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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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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: Xxxx X. Xxxxxxxx, Xx.
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XXXX X. XXXXXXXX, XX.,
President and Chief Executive
Officer
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"EMPLOYEE"
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Xxxx X. Xxxxxxxx
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XXXX X. XXXXXXXX
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