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DEFERRED SHARES AGREEMENT
FOR ▇▇▇▇ ▇. ▇▇▇▇▇
WHEREAS, ▇▇▇▇ ▇. ▇▇▇▇▇ ("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:
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(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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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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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.
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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/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., 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 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/ ▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇
Date: April 15, 1996
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