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EXHIBIT-10.10
Form of Registration Rights Agreement
by and between the Company
and the Lexford Shareholders
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement is made as of August 1, 1996, by and
between Cardinal Realty Services, Inc., an Ohio corporation (the "Company"), and
those certain holders of the Company's common stock listed on the signature page
hereto (the "Holders").
BACKGROUND INFORMATION
A. Pursuant to the terms of an Agreement and Plan of Merger dated as of
July 19, 1996 by and among the Company, Rexflor Acquisition Corporation, an Ohio
corporation, Lexford Properties, Inc., a Texas corporation, and the Holders (the
"Merger Agreement"), the Holders are entitled to receive the rights conferred
upon them pursuant to this Agreement;
B. Further pursuant to the terms of the Merger Agreement, the Company
has issued shares of its common stock, no par value, (the "Common Stock") to the
Holders.
STATEMENT OF AGREEMENT
The parties acknowledge the accuracy of the foregoing Background
Information and hereby agree as follows:
ss.1. Definitions.
(a) As used herein the following defined terms shall have the
following meanings:
(i) Unless the context otherwise requires, the terms
"register," registered" and "registration" refer to a
registration effected by preparing and filing a registration
statement in compliance with the Securities Act (as defined
below) and the declaration or ordering of the effectiveness of
such registration statement.
(ii) The term "Registrable Shares" means those
Exchange Shares which, at the Effective Time, are not either
Escrow Shares or Forfeitable Shares, plus up to an additional
One Hundred Fifty Thousand Non-Forfeited Shares (150,000)
being an aggregate total of Three Hundred Fifty Thousand
(350,000) shares of Common Stock, provided, however, that
Registrable Shares shall not exceed the amount set forth on
the attached Schedule 1 with respect to each Holder.
(iii) The term "Securities Act" means the Securities
Act of 1933, as amended.
(iv) The term "Shares" means shares of Common Stock
of the Company.
(b) All other capitalized terms not otherwise defined herein
shall have the meanings ascribed to them in the Merger Agreement.
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ss.2. Company Registration.
(a) If at any time or from time to time on or after August 1,
1997, the Company shall determine to register any of its securities for
its own account in a registration statement covering the sale of Common
Stock to the general public (except with respect to any registration
filed on Form S-8, form S-4 or any successor forms thereto) the Company
shall: (i) give to the Holders written notice thereof at least thirty
(30) days before the initial filing of such registration (which shall
include a list of the jurisdictions in which the Company intends to
attempt to qualify such securities under the applicable blue sky or
other state securities laws); provided, however, in the case of a
registration statement on Form S-3, the Company shall give the Holders
written notice of the proposed filing thereof promptly after a decision
to make such filing has been made and in no event less than ten (10)
business days prior to filing; and (ii) use its best efforts to include
in such registration (and any related qualification under blue sky
laws) and in any underwriting involved therein, all the Registrable
Shares specified in a written request or requests, made within ten (10)
days after receipt of such written notice from the Company, by any
Holder or Holders, except as set forth in ss.2(b) below.
(b) If the sale of Common Stock pursuant to paragraph (a)
above is made pursuant to an underwritten public offering, the right of
any Holder to registration pursuant to this ss.2 shall be conditioned
upon such Holder's participation in the underwriting to the extent
provided herein. All Holders proposing to distribute their Registrable
Shares through such underwriting shall (together with the Company)
enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting by the
Company. Notwithstanding any other provision of this ss.2, if the
underwriter determines that marketing factors require a limitation of
the number of shares to be underwritten, the underwriter may limit the
number of Registrable Shares to be included in the registration and
underwriting. The Company shall so advise all Holders, and the number
of shares that may be included in the registration and underwriting
shall be allocated (i) first, among the securities the Company proposes
to sell; (ii) second, among those shares of Common Stock to be made
subject to that certain Registration Rights Agreement (the "First
Registration Rights Agreement") to be entered into pursuant to the
terms of that certain letter agreement dated November 30, 1995 between
the Company and Bank of America National Trust and Savings Association
("B of A") and in accordance with the terms set forth in the First
Registration Rights Agreement; and (iii) third, among all Holders of
Registrable Shares and among other securities as to which the Company
has extended registration or similar rights in effect at such time, in
proportion, as nearly as practicable, to the respective amounts of
Registrable Shares held by such Holders and the securities covered by
such registration rights existing at the time of filing the
registration statement. The registration rights of the Holders pursuant
to this Agreement are fully subordinated to the rights of B of A under
the First Registration Rights Agreement. If any Holder disapproves of
the terms of any such underwriting, such Holder may elect to withdraw
therefrom by written notice to the Company and the underwriter. In the
event of any such withdrawal, the Company will include, on a
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proportionate basis (determined in accordance with the preceding
sentence), in any such registration in lieu thereof any additional
Registrable Shares and such other securities having registration rights
which were requested to be included by a Holder and which were excluded
pursuant to the above-described underwriter limitation up to the
maximum set by such underwriter.
ss.3. Expenses of Registration. All expenses incurred in connection
with any registration or qualification pursuant to this Agreement, including,
without limitation, all registration filing and qualification fees, fees and
expenses associated with registration or qualification under state securities or
"Blue Sky" laws, printing expenses, fees and disbursements of counsel for the
Company and expenses and fees of any special audits incidental to or required by
such registration, shall be borne by the Company; provided, however, that the
Company in any event shall not be required to pay the underwriters' discounts or
commissions relating to Registrable Shares (such underwriters' discounts or
commissions are to be borne by the Holders, on a pro rata basis, based on the
number of Registrable Shares sold by each of them).
ss.4. Registration Procedures.
(a) In the case of each registration effectuated by the
Company pursuant to this Agreement, the Company will keep each
Holder participating therein advised in writing as to the
initiation of such registration (and any state qualifications)
and as to the completion thereof.
(b) Also in the case of each registration effectuated by the
Company pursuant to this Agreement, the Company will:
(i) keep such registration or qualification pursuant
to ss.2 effective for a period of 180 days or until all the
Holders have completed the distribution described in the
registration statement relating thereto, whichever occurs
first;
(ii) furnish such number of copies of such
registration statement, each amendment and supplement thereto,
the prospectus included in such registration statement
(including each preliminary prospectus) and such other
documents incident thereto as a Holder from time to time may
reasonably request in order to facilitate the disposition of
the Registrable Shares owned by such Holder;
(iii) use its best efforts to register or qualify
such Registrable Shares under such other securities or blue
sky laws of such jurisdictions as may be reasonably necessary
and do any and all other acts and things which may be
reasonably necessary or advisable to enable such Holder to
consummate the disposition in such jurisdictions of the
Registrable Shares owned by such Holder; provided, however,
that the Company will not be required to register or qualify
any Registrable Shares in any jurisdiction in which it did not
otherwise intend to offer or sell any other shares of Common
Stock;
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(iv) notify each Holder of Registrable Shares, at any
time when a prospectus relating thereto is required to be
delivered under the Securities Act, of the occurrence of any
event as a result of which the prospectus included in such
registration statement contains an untrue statement of a
material fact or omits any fact necessary to make the
statements therein not misleading, and, at the request of any
such Holder, the Company will prepare a supplement or
amendment to such prospectus so that, as thereafter delivered
to the purchasers of such Registrable Shares, such prospectus
will not contain an untrue statement of a material fact or
omit to state any fact necessary to make the statements
therein not misleading;
(v) promptly notify the Holders of Registrable Shares
and the underwriters of the following events and (if requested
by any such person) confirm such notification in writing: (A)
the filing of the prospectus or any prospectus supplement and
the registration statement and any amendment or post-effective
amendment thereto and, with respect to the registration
statement or any post- effective amendment thereto, the
declaration of the effectiveness of such documents, (B) any
requests by the Securities and Exchange Commission for
amendments or supplements to the registration statement or the
prospectus or for additional information, (C) the issuance or
threat of issuance by the Securities and Exchange Commission
of any stop order suspending the effectiveness of the
registration statement or the initiation of any proceedings
for that purpose, and (D) the receipt by the Company of any
notification with respect to the suspension of the
qualification of the Registrable Shares for sale in any
jurisdiction or the initiation or threat of initiation of any
proceeding for such purpose;
(vi) cause all such Registrable Shares to be listed
on each securities exchange on which the Common Stock is then
listed;
(vii) make available for inspection by any Holder of
Registrable Shares, any underwriter participating in any
disposition pursuant to such registration statement and any
attorney, accountant or other agent retained by any such
Holder or underwriter, all financial and other records,
pertinent corporate documents and properties of the Company,
and cause the Company's officers, directors, employees and
independent accountants to supply all information reasonably
requested by any such Holder, underwriter, attorney,
accountant or agent in connection with such registration
statement;
(viii) otherwise use its commercially reasonable
efforts to comply with all applicable rules and regulations of
the Securities and Exchange Commission, and make available to
the Holders, as soon as reasonably practicable, an earnings
statement covering the period of at least twelve months
beginning with the first day of the Company's first full
calendar quarter after the effective date of the registration
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statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158
thereunder.
ss.5. Holdback Agreements. Each Holder of Registrable Shares agrees not
to effect any public sale or distribution (including sales pursuant to Rule 144
promulgated pursuant to the Securities Act) of equity securities of the Company
or any securities convertible into or exchangeable or exercisable for such
equity securities, during the seven days prior to and during the one hundred
eighty (180) day period beginning on the effective date of the underwritten
registration pursuant to ss.2 hereof in which Registrable Shares are included
(except for sales of such securities as part of such underwritten registered
offering).
ss.6. Participation in Underwritten Registrations. No Holder may
participate in any registration hereunder which is underwritten unless such
Holder completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents required under the
terms of such underwriting agreement referred to in ss.2 hereof; provided, that
no holder of Registrable Shares included in any underwritten registration shall
be required to make any representations or warranties to the Company or the
underwriters other than representations and warranties regarding such Holder and
such Holder's intended method of distribution.
ss.7. Indemnification.
(a) The Company shall indemnify each Holder with respect to
such registration or qualification effected pursuant to this
Agreement and in which Registrable Shares are included,
against all claims, losses, damages and liabilities (or
actions in respect thereto) arising out of or based on any
untrue statement (or alleged untrue statement) of a material
fact contained in any prospectus, registration statement or
other document incident to any such registration or
qualification, or based on any omission (or alleged omission)
to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, or
any violation by the Company of any rule or regulation,
including, without limitation, the Securities Act, applicable
to the Company and relating to action or inaction required of
the Company in connection with any such registration,
qualification or compliance and will reimburse each such
Holder, and each of such Holder's heirs, for any legal and any
other expenses incurred in connection with investigating or
defending any such claim, loss, damage, liability or action,
including reasonable attorneys' fees; provided, however, that
the Company will not be liable in any such case to the extent
that any such claim, loss, damage or liability arises out of
or is based on any untrue statement or omission based upon and
in conformity with information furnished to the Company, or
confirmed as accurate, by such Holder. Such indemnity shall be
effective notwithstanding any investigation made by or on
behalf of any Holder, or any such officer, director, partner,
employee or controlling person, and shall survive any transfer
by the same of any of the Shares.
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(b) Each Holder shall, if Registrable Shares held by or
issuable to such Holder are included in the securities as to
which such registration or qualification is being effected,
indemnify the Company, each of its directors, officers and
employees, and each other person controlling, controlled by or
affiliated with the Company within the meaning of the
Securities Act, and any underwriter of the Securities against
all claims, losses, damages and liabilities (or actions in
respect thereto) arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact
contained in any prospectus, registration statement or other
document incident to any such registration or qualification,
or based on any omission (or alleged omission) to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and
will reimburse the Company, such Holders, such directors,
officers, partners, employees, persons or underwriters for any
legal or any other expenses incurred in connection with
investigating or defending any such claim, loss, damage,
liability or action, including reasonable attorneys' fees, in
each case to the extent, but only to the extent, that such
untrue statement (or alleged untrue statement) or omission (or
alleged omission) is made in such registration statement,
prospectus or other document in reliance upon and in
conformity with information furnished to the Company, or
confirmed as accurate, by such Holder. Such indemnity shall be
effective notwithstanding any investigation made by or on
behalf of the Company, any such director, officer, partner,
employee, or controlling person and shall survive the transfer
of such securities by such seller.
(c) Each party entitled to indemnification under this section
(the "Indemnified Party") shall give notice to the party
required to provide indemnification (the "Indemnifying Party")
promptly after such Indemnified Party has actual knowledge of
any claim as to which indemnity may be sought. Unless in the
reasonable judgment of the Indemnified Party a conflict of
interest may exist between the Indemnifying Party and the
Indemnified Party, the Indemnifying Party shall be permitted
to assume the defense of any such claim or any litigation
resulting therefrom; provided, however, that in any event
counsel for the Indemnifying Party or Indemnified Party who
shall conduct the defense of such claim or litigation as
provided above shall be approved by the other Party (whose
approval shall not be unreasonably withheld), and such other
Party may participate in such defense at such Party's expense;
provided, further, that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this section.
(d) The Indemnified Party shall make no settlement of any
claim or litigation which would give rise to liability on the
part of the Indemnifying Party under an indemnity contained in
this Paragraph 7 without the written consent of the
Indemnifying Party, which consent shall not be unreasonably
withheld or delayed, and no Indemnifying Party shall make any
settlement of any such claim or litigation without the consent
of the Indemnified Party. If a firm offer is made to settle a
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claim or litigation defended by the Indemnified Party and the
Indemnified Party notifies the Indemnifying Party in writing
that the Indemnified Party desires to accept and agree to such
offer, but the Indemnifying Party elects not to accept or
agree to such offer within ten days after receipt of written
notice from the Indemnified Party of the terms of such offer,
then, in such event, the Indemnified Party shall continue to
contest or defend such claim or litigation and, if such claim
or litigation is within the scope of the Indemnifying Party's
indemnity contained in this ss.7, the Indemnified Party shall
be indemnified pursuant to the terms hereof. If a firm offer
is made to settle a claim or litigation defended by the
Indemnifying Party and the Indemnifying Party notifies the
Indemnified Party in writing that the Indemnifying Party
desires to accept such offer within ten days after receipt of
written notice from the Indemnifying Party of the terms of
such offer, then, in such event, the Indemnified Party may
continue to contest or defend such claim or litigation and, in
such event, the total maximum liability of the Indemnifying
Party to indemnify or otherwise reimburse the Indemnified
Party in accordance with the Agreement with respect to such
claim or litigation shall be limited to and shall not exceed
the amount of such settlement offer, plus reasonable
out-of-pocket costs and expenses (including reasonable
attorneys' fees) to the date of notice that the Indemnifying
Party desired to accept such settlement offer.
(e) The indemnification payments required pursuant to this
ss.7 for expenses of the investigation or defense of a claim
or lawsuit shall be made from time to time during the course
of the investigation or defense, as the case may be, upon
submission of reasonably sufficient documentation that any
such expenses have been incurred.
(f) If the Indemnification provided for in this ss.7 is
unavailable for any reason or insufficient to hold harmless an
Indemnified Party in respect of any losses, claims, damages or
liabilities or actions referred to herein, then each
Indemnifying Party shall in lieu of indemnifying such
Indemnified Party contribute to the amount paid or payable by
such Indemnified Party as a result of such losses, claims,
damages, liabilities or actions in such proportion as is
appropriate to reflect the relative fault of the Company, on
the one hand, and each Holder, on the other, in connection
with the statements or omissions which resulted in such
losses, claims, damages, liabilities or actions as well as any
other relevant equitable considerations. The relative fault
shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material
fact relates to information supplied by the Company, on the
one hand, or supplied or confirmed as accurate by a Holder, on
the other hand, and to the parties' relative intent,
knowledge, access to information and opportunity to correct or
prevent such statement or omission. The parties hereto agree
that it would not be just and equitable if contributions
pursuant to this paragraph were determined by any method of
allocation which did not take account of the equitable
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considerations referred to above in this paragraph. Subject to
the provisions of this ss.7, the amount paid or payable by an
Indemnified Party as a result of the losses, claims, damages,
liabilities or actions in respect thereof, referred to above
in this paragraph, shall be deemed to include any legal or
other expenses reasonably incurred by such Indemnified Party
in connection with investigating or defending any such action
or claim.
ss.8. Reports Under the Securities Laws. With a view to making
available to the Holders of the Registrable Shares the benefits of Rule 144
promulgated under the Securities Act and any other rule or regulation of the
Securities and Exchange Commission that may at any time permit such Holder to
sell securities of the Company to the public without registration, the Company
agrees to use its best efforts to:
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144;
(b) File with the Securities and Exchange Commission in a
timely manner all reports and other documents required of the
Company under the Securities Act and the 1934 Act; and
(c) Furnish to any Holder so long as such Holder owns any of
the Registrable Shares forthwith upon request a written
statement by the Company that it has complied with the
reporting requirements of Rule 144 and of the Securities Act
and the 1934 Act, a copy of the most recent annual or
quarterly report of the Company, and such other reports and
documents so filed by the Company as may be reasonably
requested by any such Holder in availing any such Holder of
any rule or regulation of the Securities and Exchange
Commission permitting the selling of any securities without
registration.
(d) The Holders will not exercise their rights hereunder with
respect to the sale of Registrable Shares at any time or times
during which they may sell such Registrable Shares without
registration pursuant to an available exemption from
registration under Rule 144 or otherwise.
ss.9. No Transfer of Registration Rights. The rights to cause the
Company to register Registrable Shares that are granted by the Company under
ss.2 may not be assigned by any Holder. Subject to the foregoing provision, this
Agreement shall be binding upon, and inure to the benefit of, the parties hereto
and their respective successors and permitted assigns.
ss.10. Consent: Amendments. For purposes of this Agreement, unless
otherwise specifically provided for in this Agreement, all approvals and
consents of the Holders required or permitted under this Agreement shall be
deemed granted by the affirmative vote of the holders of a majority of the
Registrable Shares held by the Holders at the time of such approval or consent.
The terms and provisions of this Agreement may not be modified or amended,
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except that they may be modified or amended with the written consent of (a) the
Company, and (b) all of the Holders. None of the terms and provisions of this
Agreement may be waived except in writing by the person so waiving.
ss.11. Granting of Registration Rights. Notwithstanding anything herein
to the contrary, the Company may grant any rights to any persons to register any
shares of capital stock or other securities of the Company notwithstanding the
fact that such rights could reasonably be expected to conflict with, or be on
parity with or greater than, the rights of the Holders provided hereunder.
ss.12. Governing Law. All questions concerning the validity or meaning
of this Agreement or relating to the rights and obligations of the parties with
respect to performance under this Agreement shall be construed and resolved
under the laws of Ohio.
ss.13. Notice. Any notice or other communication required or desires to
be given to any party under this Agreement shall be in writing and shall be
deemed given: (a) when delivered personally to that party; (b) upon receipt of a
telephone facsimile transmission answer back, (c) three (3) days after having
been deposited in the United States mail, certified or registered, return
receipt requested, postage prepaid, or (d) one (1) business day after having
been dispatched by a nationally recognized overnight courier service, addressed
to the parties or their permitted assigns at the following addresses (or at such
other address or number as is given in writing by either party to the other) as
follows:
Holders:
c/o Pat Holder
Lexford Properties, Inc.
8615 Freeport Parkway, Suite 200
Irving, Texas 75063
Telephone No.: (214) 929-4880
Telecopy No.: (214) 929-1465
with a copy to:
Michener, Larimore, Swindle, Whitaker, Flowers
Sawyer, Reynolds & Chalk, L.L.P.
3500 City Center Tower II
301 Commerce Street
Fort Worth, Texas 76102-4186
Attention: John W. Michener, Jr.
Telephone No.: (817) 335-4417
Telecopy No.: (817) 335-6935
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and:
Company:
Cardinal Realty Services, Inc.
6954 Americana Parkway
Reynoldsburg, Ohio 43068
Attention: Mark D. Thompson, Executive Vice President
Telephone No.: (614)759-1566
Telecopy No.: (614) 575-5175
with copies to:
Benesch, Friedlander, Coplan & Aronoff
2300 BP America Building
200 Public Square
Cleveland, Ohio 44114-2378
Attention: Bradley A. Van Auken
Telephone No.: (216)363-4500
Telecopy No.: (216)363-4588
ss.14. Termination. The registration rights granted under this
Agreement shall terminate with respect to any Holder one hundred eighty (180)
days after the effective date of a Registration Statement registering all of
such Holder's Registrable Shares under the Securities Act; provided, however,
that the indemnification provisions of ss.6 shall survive the termination of
such registration rights.
ss.15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute a single agreement.
ss.16. Captions. The captions of the various sections of this Agreement
are not part of the context of this agreement, but are only labels to assist in
locating those sections, and shall be ignored in construing this Agreement.
ss.17. Severability. The intention of the parties to this Agreement is
to comply fully with all laws and public policies, and this agreement shall be
construed consistently with all laws and public policies to the extent possible.
If and to the extent that any court of competent jurisdiction determines it is
impossible to construe any provision of this agreement consistently with any law
or public policy and consequently holds that provision to be invalid, such
holding shall in no way affect the validity of the other provisions of this
Agreement, which shall remain in full force and effect.
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ss.18. Jurisdiction and Venue. All parties to this Agreement hereby
designate the Court of Common Pleas of Franklin County, Ohio, as a court of
proper jurisdiction and venue for any actions or proceedings relating to this
Agreement; hereby irrevocably consent to such designation, jurisdiction and
venue; and hereby waive any objections or defenses relating to jurisdiction or
venue with respect to any action or proceeding initiated in the Court of Common
Pleas of Franklin County, Ohio.
CARDINAL REALTY SERVICES, INC.
By: /s/ Mark D. Thompson
Its: Executive Vice President
of Corporate Acquisitions
/s/ Pat Holder
-----------------------------------
PAT HOLDER
/s/ Ralph V. Williams
-----------------------------------
RALPH V. WILLIAMS
/s/ Annette Hoover
-----------------------------------
ANNETTE HOOVER
/s/ Bruce Woodward
-----------------------------------
BRUCE WOODWARD
/s/ Eric Madsen
-----------------------------------
ERIC MADSEN
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/s/ Peggy Crow Smith
---------------------------------
PEGGY CROW SMITH
FSC REALTY, L.L.C.
By: /s/ Stanley R. Fimberg
--------------------------------
Stanley R. Fimberg, Manager
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SCHEDULE 1
REGISTRABLE SHARES
MAXIMUM NUMER OF
HOLDER REGISTRABLE SHARES
- -----------------------------------------------------------------------------
Pat Holder 87,500
Annette Hoover 35,000
Bruce Woodward 35,000
Peggy Crow Smith 17,500
FSC Realty, L.L.C. 82,250
Ralph V. Williams 66,500
Eric Madsen 26,250
TOTAL 350,000
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