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RESTRICTED SHARES AGREEMENT (INVESTMENT RETURN)
FOR XXXXXX X. XXX
WHEREAS, Xxxxxx X. Xxx ("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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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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(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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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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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/ Xxxx X. Xxxxxxxx, Xx.
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Xxxx X. Xxxxxxxx, Xx.,
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/ Xxxxxx X. Xxx
-----------------------------------
XXXXXX X. XXX
Date: June 1, 1997
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