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REGISTRATION RIGHTS AGREEMENT
Registration Rights Agreement, dated as of July 28, 1997, between
CARDINAL REALTY SERVICES, INC., an Ohio corporation ("Cardinal"), and BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a national banking association
organized under the laws of the United States (the "Bank").
1. Demand Registration Right.
(a) If Cardinal shall receive at any time prior to June 30,
1998, a written request from the Bank requesting Cardinal to register
under the Securities Act of 1933, as amended (as it may be further
amended or amended and restated after the date of this Agreement, the
"1933 Act"), any or all of the 513,929 shares of Cardinal's common
stock, without par value ("Common Stock") owned by the Bank on the date
of this Agreement and any securities issued in exchange for or in
substitution of any thereof (such shares of Common Stock or other
securities as to which any such request is made pursuant to this
Section 1 or Section 2 hereof being the "Registrable Securities"),
Cardinal agrees that it will use its best efforts to cause the prompt
registration of any or all such Registrable Securities. The Bank
acknowledges that while the Common Stock is registered under the
Securities Exchange Act of 1934, as amended (as it may be further
amended or amended and restated after the date of this Agreement, the
"1934 Act"), Cardinal has never registered any of its securities in
connection with a public offering pursuant to Section 5 of the 1933
Act. As such, Bank acknowledges that, should it exercise its rights
under this Section 1 and demand registration of any or all of the
Registrable Securities in a public offering, in such event Cardinal may
be exposed to heightened scrutiny and inordinate time, effort and
expense because such registration will, in fact, constitute an initial
public offering for Cardinal. Accordingly, Cardinal may postpone for a
limited time, which in no event shall be longer than five months,
compliance with a request for registration pursuant to this Section 1
if (i) Cardinal determines in good faith in the exercise of reasonable
judgment that such compliance would have a material adverse effect
(including, without limitation, through the premature disclosure
thereof) on a proposed financing, reorganization, recapitalization,
merger, significant purchase of assets or stock, consolidation or
similar transaction, (ii) Cardinal has not theretofore registered any
equity securities under the 1933 Act, or (iii) Cardinal is then
conducting a public offering of securities and the managing underwriter
concludes in its reasonable judgment that such compliance would
adversely affect such offering. Cardinal shall only postpone the filing
of the registration statement if it has furnished to the Bank a
certificate signed by its Chairman of the Board or President, stating
that in the good faith judgment of Cardinal's Board of Directors or the
Executive Committee of its Board of Directors it would be seriously
detrimental to Cardinal for such registration statement to be filed in
the near future due to one of the reasons stated above and that it is
therefore essential to postpone the filing of such Registration
Statement for a period of not more than five months after receipt by
Cardinal of the request to register by the Bank; provided, that such
right to delay shall be exercised not more than once.
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(b) The Bank shall not make a demand for registration of
Registrable Securities pursuant to this Section 1 within six months
following the effective date of the registration for a "piggyback"
registration pursuant to Section 2 below in which Bank was afforded the
opportunity to register the Registrable Securities. Notwithstanding
anything in this Section 1 to the contrary, Cardinal shall not be
required to comply with more than one (1) request of the Bank pursuant
to this Section 1 during the term hereof; provided, however, that this
limit does not apply to a request that has been postponed under Section
1(a) unless and until such request is fulfilled. Any underwriter
selected by the Bank to act as such in connection with a registration
pursuant to this Section 1 must be reasonably acceptable to Cardinal.
(c) The registration statement filed pursuant to the request
of the Bank may, subject to the provisions of this Section 1 and
Section 8(a) hereof, include other securities of Cardinal, with respect
to which registration rights have been granted, and may include
securities of Cardinal being sold for the account of Cardinal.
(d) If "piggyback" registration pursuant to Section 2 below is
made available to the Bank covering all of the Registrable Securities
and the Bank declines to include Registrable Securities in such
registration, the demand registration right under this Section 1 shall
terminate as of the expiration of the notice period referred to in
Section 2 hereof.
2. "Piggyback" Registration. From the date of this Agreement through
and including June 30, 1998, whenever Cardinal proposes to file a registration
statement relating to any shares of its common stock under the 1933 Act (other
than a registration statement required to be filed in respect of employee
benefit plans of Cardinal on Form S-8 or any similar form from time to time in
effect, any registration statement on Form S-4 or any similar successor form or
the first time Cardinal files a registration statement on Form S-1, Form S-2 or
Form S-3 or any similar successor form to register shares of common stock for
its initial public offering), Cardinal shall, at least twenty days prior to such
filing, give written notice of such proposed filing to the Bank, and such notice
shall offer the Bank the opportunity to register such Registrable Securities as
the Bank may request. Upon the written request of the Bank, given within fifteen
days after receipt of any such notice of registration from Cardinal, to register
any shares of Common Stock owned by it (which request shall state the amount of
Registrable Securities requested to be registered), Cardinal shall use its best
efforts to, subject to clause (i) below, effect the registration under the 1933
Act and include such Registrable Securities in such registration statement (and
any related qualification under blue sky laws or other compliance) and in any
underwriting related to such registration or in a separate registration
statement concurrently filed on substantially the same terms and conditions or
those applicable to the securities offered on behalf of Cardinal; provided,
however, that if at any time after giving written notice of its intention to
register any shares of its common stock and prior to the effective date of the
registration statement filed in connection with such registration, Cardinal
shall determine for any reason not to register or to delay registration of such
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shares of common stock, Cardinal shall give written notice of such determination
to Bank and thereupon (i) in the case of a determination not to register, shall
be relieved of its obligation to register any Registrable Securities in
connection with such registration and (ii) in the case of a determination to
delay registering, shall be permitted to delay registering any Registrable
Securities for the same period as the delay in registering its common stock
originally proposed for registration. If (i) a registration statement filed by
Cardinal and referred to in this Section 2 involves an underwritten offering of
Cardinal's common stock so registered thereunder, whether or not for sale for
the account of Cardinal, to be distributed by or through one or more
underwriters, (ii) the Registrable Securities so requested to be registered for
sale for the account of Bank are also to be included in such underwritten
offering for sale upon substantially the same terms and conditions as those
proposed for the other shares of Cardinal's common stock registered thereunder
and (iii) the managing underwriter therefor in good faith concludes pursuant to
Section 8(b) hereof that the inclusion of such Registrable Securities in such
offering would adversely affect such offering, then Cardinal shall, pursuant to
Section 8(b) hereof, reduce the number of securities to be included in the
registration to the level recommended by the managing underwriter. If any person
does not agree to the terms of any such underwriting, he or she shall be
excluded therefrom by written notice from Cardinal or the underwriter. Any
Registrable Securities or other securities excluded or withdrawn from such
underwriting shall be withdrawn from such registration.
If securities are so withdrawn from the registration or if the number
of shares of Registrable Securities to be included in such registration was
previously reduced as a result of marketing factors, Cardinal shall then offer
to all persons who have retained the right to include securities in the
registration in an aggregate amount equal to the number of shares so withdrawn,
with such shares to be allocated among the persons requesting additional
inclusion in accordance with Section 8(b) hereof.
Except as otherwise provided in this Agreement, no registration
effected under Section 2 shall relieve Cardinal of its obligations to effect
registration upon request of the Bank in accordance with the provisions of
Section 1 hereof.
3. General Provisions.
(a) Registration Procedures. In the case of each registration
of Registrable Securities effected by Cardinal pursuant to Section 1
and Section 2, Cardinal will keep the Bank advised in writing as to the
initiation of each registration and as to the completion thereof. At
its expense (except as otherwise provided herein), Cardinal will use
its best efforts to permit the sale of the Registrable Securities in
accordance with the intended methods of distribution thereof, and will,
as expeditiously as possible:
(i) Prepare and file with the SEC a registration
statement with respect to such Registrable Securities and
cause the registration statement to become effective (with a
prospectus at all times meeting the requirements of the 1933
Act);
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(ii) Prepare and file with the SEC the amendments and
supplements to the registration statement and the prospectus
used in connection therewith as may be necessary to comply
with the provisions of the 1933 Act and keep the
registration statement effective for a period of six months
or until the Bank has completed the distribution described
in the registration statement relating thereto, whichever
first occurs, but not prior to the expiration of the
applicable period referred to in Section 4(3) of the 1933
Act and Rule 174 thereunder, if applicable; provided,
however, that such six-month period shall be extended for a
period of time equal to the period the Bank refrains from or
postpones selling any securities included in such
registration at the request of Cardinal or an underwriter of
common stock (or other securities so registered) of
Cardinal;
(iii) Furnish such number of prospectuses and other
documents incident thereto, including any amendment of or
supplement to the prospectus, as the Bank from time to time
may reasonably request;
(iv) Notify Bank and each selling stockholder of any
other securities of Cardinal covered by such registration
statement at any time when it becomes aware that a
prospectus relating thereto is required to be delivered
under the 1933 Act of the happening of any event as a result
of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading in the light of the
circumstances then existing, and at the request of Bank,
prepare and furnish to Bank a reasonable number of copies of
a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers
of such shares, such prospectus shall not include an untrue
statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the
circumstances then existing;
(v) Prepare and file with the SEC, promptly upon the
request of the Bank, any amendments or supplements to the
registration statement or prospectus which, in the opinion
of counsel for the Bank, is required under the 1933 Act or
the rules and regulations thereunder in connection with the
distribution of the Registrable Securities;
(vi) Cause all such Registrable Securities registered
hereunder to be listed on each securities exchange on which
similar securities issued by Cardinal are then listed;
(vii) Provide a transfer agent and registrar for all
Registrable Securities registered pursuant to such
registration statement and, if not already provided, a CUSIP
number for all such Registrable Securities, in each case not
later than the effective date of such registration;
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(viii) Otherwise use its best efforts to comply with
all applicable rules and regulations of the Commission, and
make available an earnings statement, which earnings
statement shall satisfy the provisions of Section 11(a) of
the 1933 Act;
(ix) In connection with any underwritten offering
pursuant to a registration statement filed pursuant to
Section 1 or Section 2 hereof, Cardinal will, if requested
by Bank, enter into an underwriting agreement in form
reasonably necessary to effect the offer and sale of the
Registrable Securities, provided such underwriting agreement
contains customary underwriting provisions and provided
further that if the underwriter so requests the underwriting
agreement will contain customary contribution provisions;
and
(x) Subject to Bank's obligations to pay certain
expenses pursuant to Section 5 hereof, use its best efforts
to effect such qualifications under applicable Blue Sky or
other state securities laws as may be reasonably requested
by the Bank (provided that Cardinal shall not be obligated
to file a general consent to service of process or qualify
to do business as a foreign corporation or otherwise subject
itself to taxation in any jurisdiction solely for the
purpose of any such qualification) to permit or facilitate
such sale or other distribution.
(b) The Bank agrees not to effect any public sale or
distribution of Registrable Securities, including a sale pursuant to
Rule 144 under the 1933 Act during the fourteen-day period prior to,
and during the ninety-day period beginning on, the effective date of a
registration statement in which shares of its Registrable Securities
are registered (except as part of such registration), if and to the
extent requested by the managing underwriter(s) in the case of an
underwritten public offering under the 1933 Act, provided that all
officers and directors of Cardinal and any other holders of securities
of the same or similar class as (or exchangeable for or convertible
into) the Registrable Securities which are also registered in such
offering are bound by and have entered into or are otherwise bound by
similar agreements. The obligations described in this Section 3(b)
shall not apply to a registration relating solely to employee benefit
plans on Form S-1 or Form S-8 or Form S-4 or similar 1933 Act forms
promulgated in the future.
(c) Notwithstanding anything to the contrary contained in this
Agreement, the Bank will not exercise any rights to demand or
participate in any registered public offering of Cardinal's common
stock if the Bank owns less than three percent (3%) of the issued and
outstanding shares of the Common Stock (the "Minimum Percentage";
provided, however, that the Minimum Percentage will be increased to
four percent (4%) of the issued and outstanding shares of Common Stock
if the Common Stock is listed on the New York Stock Exchange, Inc. and
has enjoyed an average weekly trading volume of at least two percent
(2%) of the total number of issued and outstanding shares of Common
Stock over the thirteen (13) calendar weeks preceding the date on which
the Bank might otherwise exercise such rights to demand or participate
in a registered public offering) it might otherwise sell that number of
shares of Common Stock which it desires to be registered without
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registration under the 1933 Act by reason of an exemption from
registration pursuant to a sale or sales over a period not to exceed
two months in brokers' transactions exempt from registration under the
1933 Act by virtue of Rule 144 promulgated thereunder.
(d) In no event will Bank transfer or sell a number of shares of
its common stock in excess of one hundred seventy-four thousand one
hundred four (174,104) shares (or an equivalent number or amount of
successor Registrable Securities) to any third party, reduced by that
number of shares of Cardinal's common stock held by such third party
prior to such transfer or sale unless Cardinal shall have theretofore
undergone an "ownership change" within the meaning of Section 382(g)
of the Internal Revenue Code of 1986, as amended.
(e) Cardinal covenants that it has not previously granted any
registration rights for its securities with the sole exception of that
certain Registration Rights Agreement dated as of August 1, 1996 among
Cardinal and the former shareholders of Lexford Properties, Inc. From
and after the date of this Agreement through June 30, 1998, Cardinal
shall not, without the prior written consent of the Bank, enter into
any agreement with any holder or prospective holder of any securities
of Cardinal giving such holder or prospective holder any registration
rights the terms of which are more favorable than the registration
rights granted to the Bank hereunder.
(f) Except as otherwise permitted or contemplated hereunder,
Cardinal shall not act or fail to act in any manner that would
negatively impact its ability to promptly register the Registrable
Securities.
(g) Through June 30, 1998, Cardinal shall forbear from any
actions which would further limit or modify the rights of the Bank to
transfer its common stock, including, without limitation, actions by
Cardinal with respect to its common stock which would cause a
"transaction" or "transactions" referred to in the first parenthetical
in Section 2.B.(1)(a) of Article EIGHTH of the Company's Amended
Articles of Incorporation (the "Articles") which would limit the
availability of transfer of the Shares as a result of a "change of
ownership" as referred to in the Articles.
4. Information, Documents, Etc. Upon making a request for registration
pursuant to Section 1 or Section 2, the Bank shall promptly furnish to Cardinal
such information regarding its holdings and the proposed manner of distribution
thereof as Cardinal may reasonably request and as shall be required in
connection with any registration, qualification or compliance referred to in
this Agreement. Cardinal agrees that it will promptly furnish to the Bank the
number of prospectuses, offering circulars or other documents, or any amendments
or supplements thereto, incident to any registration, qualification or
compliance referred to in this Agreement as the Bank from time to time may
reasonably request.
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5. Expenses. Cardinal will bear customary expenses of registrations
incident to Cardinal's performance of or compliance with both Section 1 and
Section 2 of this Agreement (other than underwriting discounts and commissions
and brokerage commissions, fees and expenses, if any, payable with respect to
Registrable Securities sold by the Bank), including, without limitation,
registration and filing fees, printing expenses, fees and expenses of compliance
with Blue Sky or other state securities law (provided, however, that Cardinal
will not be responsible for any such Blue Sky or other securities law related
expenses in any states in which Cardinal is not required to qualify pursuant to
Section 3(a)(x) or where neither Cardinal nor any managing underwriter otherwise
intend to issue or sell shares of Cardinal's common stock), and fees and
disbursements of (i) counsel for Cardinal and one separate lawyer or law firm
acting as special counsel for Bank in connection with such registration, (ii)
all independent certified public accountants, (iii) underwriters (excluding
discounts and commissions payable by the Bank pursuant to the first
parenthetical in this Section 5), and (iv) other persons retained by Cardinal.
6. Cooperation.
(a) In connection with any registration of Registrable
Securities pursuant to this Agreement, Cardinal and the Bank agree to
enter into such customary agreements (including an underwriting
agreement containing such terms and provisions, including
indemnification provisions, as are customarily contained in
underwriting agreements for comparable offerings and, if no
underwriting agreement is entered into, an indemnification agreement on
such terms as is customary in transactions of such nature) reasonably
acceptable to them and take all such other actions, including, without
limitation, cooperating with due diligence activities, completing and
executing all questionnaires, powers of attorney, and other documents
required under the applicable underwriting agreement as the other party
hereto or the underwriters, if any, participating in such offering and
sale may reasonably request in order to expedite or facilitate such
offering and sale; and
(b) In connection with any such registration, Cardinal will
furnish, at the request of the Bank or any underwriters participating
in such offering and sale, (i) a comfort letter or letters addressed to
the Bank and any underwriters, dated the effective date of the
registration statement with respect to the Registrable Securities
and/or the date of the closing for the sale of the Registrable
Securities, from the independent certified public accountants of
Cardinal and addressed to the Bank and any underwriters participating
in such offering and sale, which letter or letters shall address such
matters as the Bank and underwriters may reasonably request and as may
be customary in transactions of a similar nature for similar entities
and (ii) an opinion addressed to the Bank and any underwriters, dated
the effective date of the registration statement and/or the date of the
closing for the sale of the Registrable Securities, of the counsel
representing Cardinal with respect to such offering and sale, addressed
to the Bank and any such underwriters, which opinion shall address such
matters as they may reasonably request and as may be customary in
transactions of a similar nature for similar entities.
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7. Action to Suspend Effectiveness; Supplement to Registration
Statement.
(a) Cardinal will notify the Bank and its counsel promptly of (i)
any action by the Securities and Exchange Commission (the "SEC") to
suspend the effectiveness of the registration statement covering the
Registrable Securities or the institution or threatening of any
proceeding for such purpose (a "stop order") or (ii) the receipt by
Cardinal of any notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for
such purpose. Immediately upon receipt of any such notice, the Bank
shall cease to offer or sell any Registrable Securities pursuant to
the registration statement in the jurisdiction to which such stop
order or suspension relates. Cardinal will use its best efforts to
prevent the issuance of any such stop order or the suspension of any
such qualifications and, if any such stop order is issued or any such
qualification is suspended, to obtain as soon as possible the
withdrawal or revocation thereof, and will notify the Bank and its
counsel at the earliest practicable date of the date on which the Bank
may offer and sell the Registrable Securities pursuant to the
registration statement.
(b) Within the applicable period referred to in Section 3(a)
following the effectiveness of a registration statement filed pursuant
to this Agreement, Cardinal will notify the Bank and its counsel
promptly of the occurrence of any event or the existence of any state
of facts that, in the reasonable judgment of Cardinal, should be set
forth in such registration statement. Immediately upon receipt of such
notice, the Bank shall cease to offer or sell any Registrable
Securities pursuant to such registration statement, cease to deliver
or use the prospectus relating to such registration statement, and if
so requested by Cardinal, return to Cardinal, at Cardinal's expense,
all copies (other than permanent file copies) of such registration
statement and prospectus. Cardinal will, as promptly as practicable,
take such action as may be necessary to amend or supplement such
registration statement in order to set forth or reflect such event or
state of facts. Cardinal will promptly furnish copies of such proposed
amendment or supplement to the Bank and its counsel and will not file
or distribute such amendment or supplement without the prior consent
of the Bank, which consent shall not be unreasonably withheld.
8. Allocation of Registration Opportunities.
(a) Pro Rata Participation in Demand Registrations. If requested
by Cardinal, the Bank and all other holders of Cardinal securities of
the same or similar class as the Registrable Securities proposing to
distribute their Registrable Securities and such other Cardinal
securities as to which such other holders have registration rights
similar, for purposes of this Section 8(a), to those granted to the
Bank under Section 1 of this Agreement and/or, for purposes of Section
8(b) hereof, to those granted to the Bank under Section 2 of this
Agreement (collectively, the "Subject Securities"), through an
underwriting shall enter into an underwriting agreement in customary
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form with the representative of the underwriter or underwriters
selected for such underwriting by the holders of a majority (by number
of shares) of the Registrable Securities and the Subject Securities
requesting registration and reasonably acceptable to Cardinal. If a
requested registration pursuant to Section 1 involves an underwritten
offering, and if the managing underwriter shall advise Cardinal, the
Bank and the holders of the Subject Securities requesting to be
included in the registration in writing that, in its good faith
opinion, the number of securities proposed to be included in the
registration (including securities proposed to be registered for the
account of Cardinal) exceeds the number which can be sold in such
offering without otherwise having an adverse effect on such offering,
including the price at which such shares can be sold, Cardinal will
include in such registration the maximum number of securities which it
is so advised can be sold without such an adverse effect, allocated as
follows:
(i) first, to the Registrable Securities and the Subject
Securities requested to be included in such registration (except
for any Subject Securities referred to in clause (ii) immediately
following), if necessary, allocated pro rata among all such
requesting selling shareholders on the basis of the relative
number of shares of Registrable Securities or Subject Securities
each such holder has requested to be included in such
registration,
(ii) second, to those Subject Securities requested to be
included in such registration by holders whose registration
rights are made expressly subordinate to those of the Bank and
any other holder of Subject Securities referred to in the
immediately preceding clause (i) (if necessary, allocated pro
rata among all such requesting selling shareholders on the basis
of the relative number of shares of Subject Securities each such
holder has requested to be included in such registration), and
(iii) third, to any other securities proposed to be included
in such registration (including Cardinal securities which are not
Subject Securities).
(b) Priority in "Piggyback" Registrations. If a registration is
made pursuant to Section 2 and if such registration involves an
underwritten offering and the managing underwriter advises Cardinal in
writing that, in its good faith opinion, the number of securities
requested to be included in such registration exceeds the number which
can be sold in such offering without otherwise having an adverse
effect on such offering, including the price at which such shares can
be sold, Cardinal will include in such registration the maximum number
of securities which it is so advised can be sold without such an
adverse effect, allocated as follows:
(i) first, to all securities proposed to be registered by
Cardinal for its own account,
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(ii) second, to all of the Registrable Securities and the
Subject Securities requested to be included in such registration
(except for any Subject Securities referred to in clause (iii)
immediately following), if necessary, allocated pro rata among
all such requesting selling shareholders on the basis of the
relative number of shares of Registrable Securities or Subject
Securities each such holder has requested to be included in such
registration,
(iii) third, to all of the other selling shareholders'
Subject Securities requested to be included in such registration
by holders whose registration rights are made expressly
subordinate to those of the Bank and any other holder of Subject
Securities referred to in the immediately preceding clause (ii)
(if necessary, allocated pro rata among all such requesting other
selling shareholders on the basis of the relative number of
shares of Subject Securities each such holder has requested to be
included in such registration), and
(iv) fourth, any other securities proposed to be registered
by Cardinal other than for its own account.
(c) Cardinal shall not limit the number of Registrable Securities
to be included in a registration pursuant to this Agreement in order
to include shares held by shareholders with no registration rights or
to include shares of stock issued to employees, officers, directors,
or consultants pursuant to a Cardinal stock plan.
9. Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Securities and Exchange Commission (the
"Commission") that may permit the sale of the Bank owned restricted securities
of Cardinal to the public without registration, Cardinal agrees to use its best
efforts to:
(a) Make and keep public information regarding Cardinal available
as those terms are understood and defined in Rule 144 under the 1933
Act, at all times from and after the effective date of the first
registration under the 1933 Act filed by Cardinal for an offering of
its securities to the general public;
(b) File with the Commission in a timely manner all reports and
other documents required of Cardinal under the 1933 Act and the 1934
Act at any time after it has become subject to such reporting
requirements;
(c) So long as the Bank owns any restricted securities, furnish
to the Bank forthwith upon written request a written statement by
Cardinal as to its compliance with the reporting requirements of Rule
144 and of the 1933 Act (at any time after it has become subject to
such reporting requirements) and the 1934 Act, a copy of the most
recent annual or quarterly report of Cardinal, and such other repots
and documents so filed as the Bank may reasonably request in availing
itself of any rule or regulation of the Commission allowing the Bank
to sell any such securities without registration.
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10. Indemnification.
(a) Cardinal hereby agrees to indemnify and hold harmless the
Bank, each of its executive officers, directors, and each other
person, if any, who controls the Bank within the meaning of the 1933
Act (collectively, the "Bank Representatives"), and agrees to
indemnify each underwriter participating in such offering and sale and
each person, if any, who controls such underwriter within the meaning
of the 1933 Act, against any losses, claims, damages or liabilities,
joint or several, to which the Bank, a Bank Representative or any such
underwriter or controlling person may become subject under the 1933
Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material
fact contained in any registration statement under which such
Registrable Securities were registered under the 1933 Act pursuant to
Section 1 or Section 2, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereof, or arise
out of or are based upon the 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
Cardinal of the 1933 Act or the 1934 Act or any rule or regulation
thereunder applicable to Cardinal and relating to action or inaction
required of Cardinal in connection with any such registration
statement, prospectus, amendment or supplement, and will reimburse the
Bank, each such Bank Representative, each such underwriter and each
such controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating and defending or
settling any such loss, claim, damage, liability or action; provided,
however, that Cardinal will not be liable in any such case if and to
the extent that any such loss, claim, damage or liability arises out
of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission so made in reliance upon and in
conformity with written information pertaining to the Bank, or a Bank
Representative, expressly furnished to Cardinal, such underwriter or
such controlling person by the Bank or a Bank Representative for use
in connection with such registration by the Bank, or by the Bank's or
such Bank Representative's failure to deliver a copy of the
registration statement or prospectus or any amendment or supplement
thereto after being furnished with a sufficient number of copies of
the same by Cardinal. It is agreed that the indemnity agreement
contained in this Section 10(a) shall not apply to amounts paid in
settlement of any such loss, claim, damages, liability, or action if
such settlement is effected without the consent of Cardinal (which
consent shall not be unreasonably withheld).
(b) The Bank hereby agrees to indemnify and hold harmless
Cardinal and each person, if any, who controls Cardinal within the
meaning of the 1933 Act, each officer of Cardinal who signs the
registration statement, each director of Cardinal, each underwriter
and each person who controls any underwriter within the meaning of the
1933 Act, against all losses, claims, damages or liabilities, joint or
several, to which Cardinal or such officer or director or underwriter
or controlling person may become subject under the 1933 Act or
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otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained
in the registration statement under which such Registrable Securities
were registered under the 1933 Act, any preliminary prospectus or
final prospectus contained therein, or any amendment or supplement
thereof, or arise out of or are based upon the 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 Cardinal and each such officer, director,
underwriter and controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating and
defending or settling any such loss, claim, damage, liability or
action; provided, however, that the Bank will be liable hereunder in
any such case if and only to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with written information furnished to
Cardinal or any underwriter or controlling person by the Bank under an
instrument duly executed by the Bank and stated to be specifically for
use in connection with such registration; provided, further, that the
obligations of the Bank hereunder shall not apply to amounts paid in
settlement of any such claims, losses, damages, or liability (or
action in respect thereof) if such settlement is effected without the
consent of the Bank (which consent shall not be unreasonably
withheld); and provided that in no event shall any indemnity under
this Section 10 exceed the proceeds (remaining after deducting any
expenses which Bank is required to bear under Section 5 of this
Agreement) received by the Bank upon the sale of the Registrable
Securities giving rise to such indemnification obligation.
(c) Promptly after receipt by party indemnified under this
Section 10 (an "indemnified party") of notice of the commencement of
any action, such indemnified party shall, if a claim in respect thereof
may be made against the indemnifying party hereunder, notify the
indemnifying party in writing thereof, but the omission so to notify
the indemnifying party shall not relieve it from any liability which it
may have to any indemnified party hereunder except to the extent such
indemnifying party is prejudiced by such failure to so notify nor shall
it relieve it from any liability which it may have to any indemnified
party other than under this Agreement. In case any such action shall be
brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate in and, to the extent it shall wish,
to assume and undertake the defense thereof with counsel approved by
such indemnified party (whose approval shall not be unreasonably
withheld), and, after notice from the indemnifying party to such
indemnified party of its election so to assume and undertake the
defense thereof, the indemnifying party shall not be liable to such
indemnified party under this Section 8 for any legal expenses
subsequently incurred by such indemnified party in connection with the
defense thereof; provided, however, that, if the defendants in any such
action include both the indemnified party and the indemnifying party
and the indemnified party shall have reasonably concluded that there
may be reasonable defenses available to it which are different from or
additional to those available to the indemnifying party or if the
interests of the indemnified party reasonably may be deemed to conflict
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with the interests of the indemnifying party, the indemnified party
shall have the right to select a separate counsel and to control the
defense of such action, with the reasonable expenses and fees of such
separate counsel and other reasonable expenses related to such
participation to be reimbursed by the indemnifying party as incurred.
In any such action, any indemnified party shall have the right to retain
its own counsel, but, except as provided above, the fees and disbursements of
such counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party shall have failed to retain counsel for the indemnified party
as aforesaid, (ii) the use of counsel chosen by the indemnifying party to
represent it and the indemnified party would present such counsel with a
conflict of interest, (iii) the actual or potential defendants in, or targets
of, any such action include both the indemnified party and the indemnifying
party and the indemnified party shall have reasonably concluded that there may
be legal defenses available to it or other indemnified parties which are
different from or additional to those available to the indemnifying party or
(iv) the indemnifying party and such indemnified party shall have mutually
agreed to the retention of such counsel. It is understood that the indemnifying
party shall not, in connection with any action or related actions in the same
jurisdiction, be liable for the fees and disbursements of more than one separate
firm qualified in such jurisdiction to act as counsel for the indemnified party
and shall not be obligated to pay the fees and expenses of more than one counsel
(and any required local counsel) for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest exists between such indemnified
party and any other of such indemnified parties with respect to such claim. No
indemnifying party, in the defense of any such claim or litigation, shall,
except with the consent of each indemnified party, consent to entry of any
judgment or enter into any settlement that does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect to such claim or litigation. Each
indemnified party shall furnish such information regarding itself and of the
claim in question as an indemnifying party may reasonably request in writing and
as shall be reasonably required in connection with defense of such claim and
litigation resulting therefrom.
If the indemnification provided for in this Section 10 is held by a court
of competent jurisdiction to be unavailable to 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 Cardinal, on the
one hand, and the Bank, 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 Cardinal,
on the one hand, or the Bank, 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
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method of allocation which did not take account of the equitable considerations
referred to above in this paragraph. Subject to the provisions of this Section
10, 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; provided that such amount paid or payable
shall in no event exceed the proceeds (remaining after deducting registration
and selling expenses) received by the indemnifying party upon the sale of the
securities registered which are the subject matter of the losses, claims,
damages or liabilities of the indemnified party.
The indemnification of underwriters provided for in this Section 10 shall
be on such other terms and conditions as are at the time customary and
reasonably required by such underwriters, in which event the indemnification of
the Bank in such underwriting shall at the Bank's request be modified to conform
to such other terms and conditions.
11. Amendments. This Agreement may not be modified, amended, altered or
supplemented except upon the execution and delivery of a written agreement
executed by the Bank and Cardinal.
12. Notices. All notices and other communications hereunder shall be in
writing and shall be given and shall be deemed to have been duly given on the
date of delivery if delivered in person, three business days following deposit
in the U.S. mail certified, return receipt requested or upon confirmation (or,
not transmitted on a business day, upon the next business day following
confirmation) of facsimile transmission, to the parties as follows:
(i) if to the Bank, to:
Bank of America NT&SA
Investment Administration #15027
555 California Street
San Francisco, CA 94104
Attention: DPC Portfolio Manager
Telephone: (415) 953-6633
Facsimile: (415) 622-3637
with a copy to:
Bank of America NT&SA
Legal Department #03017
555 California Street
San Francisco, CA 94014
Attention: Corporate Advice Group
Telephone: (415) 953-8126
Fascimile: (415) 622-6291
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(ii) if to Cardinal to:
Cardinal Realty Services, Inc.
6954 Americana Parkway
Reynoldsburg, Ohio 43068
Attention: Mark D. Thompson, Chief Financial Officer
Telephone: (614) 575-5228
Facsimile: (614) 575-5240
with a copy to:
Benesch, Friedlander, Coplan & Aronoff LLP
2300 BP America Building
200 Public Square
Cleveland, Ohio 44114-2378
Attention: Bradley A. Van Auken, Esq.
Telephone: (216) 363-4413
Facsimile: (216) 363-4588
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
only be effective upon receipt.
13. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but each of which
together shall constitute one and the same document.
14. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio.
15. Entire Agreement. This Agreement, together with the relevant
provisions of that certain Letter Agreement between the Bank and Cardinal dated
November 29, 1995 (a copy of which Letter Agreement is attached hereto as
Exhibit A), constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof. In the event of any conflict between the
terms of this Agreement and the Letter Agreement, the terms of this Agreement
shall control.
16. Severability. If any term, provision, covenant or restriction of
this Agreement, is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
17. Specific Performance. Cardinal acknowledges that the Bank will have
no adequate remedy at law if Cardinal fails to perform any of its obligations
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under this Agreement. In such event, the Bank shall have the right, in addition
to any other right it may have, to specific performance of this Agreement.
18. Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including, without limitation and without the need for express assignment, any
subsequent holders of the Registrable Securities.
19. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
CARDINAL REALTY SERVICES, INC.
By: /s/ John B. Bartling, Jr.
-------------------------
John B. Bartling, Jr.
President and Chief Executive Officer
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: /s/ James A. Dern
-----------------
James A. Dern
Title: Vice President
By: /s/ Mark H. Popieluch
---------------------
Mark H. Popieluch
Title: Senior Vice President
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