**Exhibit 10.1**

 

**EXECUTION**

**COUNTERPART**

 

 

AGREEMENT AND PLANOF SHARE EXCHANGE

 

between

 

Wilson/BennettCapital Management, Inc.

 

and

 

Cardinal FinancialCorporation

 

 

April 29, 2005

 

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**TABLE OF CONTENTS**

 
| **ARTICLE 1**                                 |                                              |
|-----------------------------------------------|---------------------------------------------------|
| **The Share  Exchange and Related Matters**   |                                              |
|                                          |                                              |   |   |
| 1.1                                           | The Share Exchange                                |   |
| 1.2                                           | The Closing and Effective  Date                   |   |
| 1.3                                           | Definitions                                       |   |
|                                          |                                              |   |   |
| **ARTICLE 2**                                 |                                              |
| **Effect of Share  Exchange on Common Stock** |                                              |
|                                          |                                              |   |   |
| 2.1                                           | Conversion of Shares                              |   |
| 2.2                                           | Manner of Exchange                                |   |
| 2.3                                           | Fractional Shares                                 |   |
| 2.4                                           | Dividends                                         |   |
|                                          |                                              |   |   |
| **ARTICLE 3**                                 |                                              |
| **Representations  and Warranties**           |                                              |
|                                          |                                              |   |   |
| 3.1                                           | Representations and  Warranties of Wilson/Bennett |   |
|                                          | (a)                                               | Organization and Standing |   |
|                                          | (b)                                               | Authority |   |
|                                          | (c)                                               | Capital Structure |   |
|                                          | (d)                                               | Ownership of the Stock |   |
|                                          | (e)                                               | Financial Statements |   |
|                                          | (f)                                               | Absence of  Undisclosed Liabilities |   |
|                                          | (g)                                               | Legal Proceedings; Compliance  with Laws |   |
|                                          | (h)                                               | Investment Advisory  Activities |   |
|                                          | (i)                                               | Reports |   |
|                                          | (j)                                               | Regulatory Approvals |   |
|                                          | (k)                                               | Labor Relations |   |
|                                          | (l)                                               | Tax Matters |   |
|                                          | (m)                                               | Property |   |
|                                          | (n)                                               | Employee Benefit Plans |   |
|                                          | (o)                                               | Investment Securities |   |
|                                          | (p)                                               | Material Contracts |   |
|                                          | (q)                                               | Insurance |   |
|                                          | (r)                                               | Absence of  Material Changes and Events |   |
|                                          | (s)                                               | Brokers and Finders |   |

 

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|                                     | (t)                                         | Environmental Matters                      |   |
|------------------------------------------|---------------------------------------------|--------------------------------------------|--------|
|                                     | (u)                                         | Untrue Statements  and Omissions           |   |
|                                     | (v)                                         | Books and Records                          |   |
|                                     |                                        |                                       |   |
| 3.2                                      | Representations  and Warranties of Cardinal |                                       |
|                                     | (a)                                         | Organization,  Standing and Power          |   |
|                                     | (b)                                         | Authority                                  |   |
|                                     | (c)                                         | Capital Structure                          |   |
|                                     | (d)                                         | Financial Statements                       |   |
|                                     | (e)                                         | Regulatory Approvals                       |   |
|                                     | (f)                                         | Absence of Material  Changes and Events    |   |
|                                     | (g)                                         | Absence of Claims                          |   |
|                                     |                                        |                                       |   |
| **ARTICLE 4**                            |                                        |
| **Conduct Prior to  the Effective Date** |                                        |
|                                     |                                        |                                       |   |
| 4.1                                      | Access to Records; Current  Information     |                                       |
| 4.2                                      | Confidentiality                             |                                       |
| 4.3                                      | Forbearances of  Wilson/Bennett             |                                       |
|                                     | (a)                                         | Ordinary Course                            |   |
|                                     | (b)                                         | Capital Stock                              |   |
|                                     | (c)                                         | Stock Splits, Etc.                         |   |
|                                     | (d)                                         | Compensation; Employment Agreements;  Etc. |   |
|                                     | (e)                                         | Benefit Plans                              |   |
|                                     | (f)                                         | Dispositions                               |   |
|                                     | (g)                                         | Acquisitions                               |   |
|                                     | (h)                                         | Governing Documents                        |   |
|                                     | (i)                                         | Contracts                                  |   |
|                                     | (j)                                         | Claims                                     |   |
|                                     | (k)                                         | Adverse Actions                            |   |
|                                     | (l)                                         | Indebtedness                               |   |
|                                     | (m)                                         | Commitments                                |   |
|                                     | (n)                                         | Payables                                   |   |
| 4.4                                      | Forbearances of Cardinal                    |                                       |
| 4.5                                      | No Solicitation                             |                                       |
| 4.6                                      | Regulatory  Applications and Approvals      |                                       |
| 4.7                                      | Client Consents                             |                                       |
| 4.8                                      | Share Exchange  Consummation                |                                       |
| 4.9                                      | Bank Accounts                               |                                       |
| 4.10                                     | Modification of  Transaction/Taxes          |                                       |
| 4.11                                     | Fiscal Year                                 |                                       |
| 4.12                                     | Demand Registration                         |                                       |

 

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| 4.13                                  | Exhibits                                                                  |                            |
|---------------------------------------|---------------------------------------------------------------------------|---------------------------------|
|                                  |                                                                      |                            |   |
| **ARTICLE 5**                         |                                                                      |
| **Additional  Agreements**            |                                                                      |
|                                  |                                                                      |                            |   |
| 5.1                                   | Benefit Plans                                                             |                            |
| 5.2                                   | Restricted Stock                                                          |                            |
| 5.3                                   | Indemnification                                                           |                            |
|                                  |                                                                      |                            |   |
| **ARTICLE 6**                         |                                                                      |
| **Conditions to  the Share Exchange** |                                                                      |
|                                  |                                                                      |                            |   |
| 6.1                                   | Conditions to Each Party’s  Obligations to Effect the Share Exchange |                            |
|                                  | (a)                                                                       | Regulatory Approvals            |   |
|                                  | (b)                                                                       | Opinions of Counsel             |   |
|                                  | (c)                                                                       | Legal Proceedings               |   |
|                                  | (d)                                                                       | Employment Agreement            |   |
|                                  |                                                                      |                            |   |
| 6.2                                   | Conditions to  Obligations of Cardinal                                    |                            |
|                                  | (a)                                                                       | Representations and  Warranties |   |
|                                  | (b)                                                                       | Performance of Obligations      |   |
|                                  | (c)                                                                       | Client Consents                 |   |
|                                  | (d)                                                                       | Life Insurance                  |   |
|                                  | (e)                                                                       | Shareholder Vote                |   |
|                                  |                                                                      |                            |   |
| 6.3                                   | Conditions to  Obligations of Wilson/Bennett                              |                            |
|                                  | (a)                                                                       | Representations and  Warranties |   |
|                                  | (b)                                                                       | Performance of  Obligations     |   |
|                                  |                                                                      |                            |   |
| **ARTICLE 7**                         |                                                                      |
| **Termination**                       |                                                                      |
|                                  |                                                                      |                            |   |
| 7.1                                   | Termination                                                               |                            |
| 7.2                                   | Effect of Termination                                                     |                            |
| 7.3                                   | Survival of  Representations, Warranties and Covenants                    |                            |
| 7.4                                   | Expenses                                                                  |                            |
|                                  |                                                                      |                            |   |
| **ARTICLE 8**                         |                                                                      |
| **General  Provisions**               |                                                                      |
|                                  |                                                                      |                            |   |
| 8.1                                   | Entire Agreement                                                          |                            |
| 8.2                                   | Waiver and Amendment                                                      |                            |
| 8.3                                   | Descriptive Headings                                                      |                            |

 

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| 8.4 | Governing Law |   |
|-----|---------------|--------|
| 8.5 | Notices       |   |
| 8.6 | Counterparts  |   |

 
| Exhibit A - Plan of Share Exchange between Cardinal  Financial Corporation and Wilson/Bennett Capital Management, Inc. |   |
|------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                   |   |
| Exhibit B - Schedule of Required Third Party  Consents*                                                                |   |
|                                                                                                                   |   |
| Exhibit B-1- Equity Securities Owned*                                                                                  |   |
|                                                                                                                   |   |
| Exhibit B-2- Wilson/Bennett Financial Statements*                                                                      |   |
|                                                                                                                   |   |
| Exhibit C - Schedule of Registrations Under Securities  Laws*                                                          |   |
|                                                                                                                   |   |
| Exhibit D - Investment Advisory Contracts*                                                                             |   |
|                                                                                                                   |   |
| Exhibit D-1 - Investment Advisory Contracts  (Clients)*                                                                |   |
|                                                                                                                   |   |
| Exhibit D-2 - Investment Advisory Contracts  (Terminating and Reducing Clients)*                                       |   |
|                                                                                                                   |   |
| Exhibit D-3 - Investment Advisory Contracts (ERISA  and IRA)*                                                          |   |
|                                                                                                                   |   |
| Exhibit D-4 - Investment Advisory Contracts (Reduced  Fees)*                                                           |   |
|                                                                                                                   |   |
| Exhibit D-5- Investment Advisory Contracts (Wrap Fee  Programs)*                                                       |   |
|                                                                                                                   |   |
| Exhibit D-6- Investment Advisory Contracts (Assets  Under Management/Fee Arrangements)*                                |   |
|                                                                                                                   |   |
| Exhibit E - Securities Violations*                                                                                     |   |
|                                                                                                                   |   |
| Exhibit F - Contracts Involving Annual Payments in  Excess of $25,000.00*                                              |   |
|                                                                                                                   |   |
| Exhibit G – Insurance*                                                                                            |   |
|                                                                                                                   |   |
| Exhibit H - Registration Rights Agreement                                                                              |   |
|                                                                                                                   |   |
| Exhibit I – Employment Agreement                                                                                  |   |

 

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* As permitted byRegulation S-K, the Company has not included this exhibit in the filing. TheCompany agrees to furnish supplementally a copy of this exhibit to theCommission upon request.

 

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**AGREEMENT AND PLAN OF SHAREEXCHANGE**

 

THIS AGREEMENT AND PLAN OF SHARE EXCHANGE (the “Agreement”)is made and entered into as of April 29, 2005 by and betweenWilson/Bennett Capital Management, Inc., a Virginia corporation (“Wilson/Bennett”)and Cardinal Financial Corporation, a Virginia corporation (“Cardinal”).

 

**WITNESSETH:**

 

WHEREAS, Wilson/Bennett is an investment advisor,registered with the Securities and Exchange Commission; and

 

WHEREAS, Cardinal is a financial holding company andthe sole shareholder of Cardinal Bank; and

 

WHEREAS, Wilson/Bennett and Cardinal desire to combinetheir respective businesses; and

 

WHEREAS, the boards of directors of Cardinal andWilson/Bennett deem it advisable for Wilson/Bennett to become a wholly ownedsubsidiary of Cardinal pursuant to this Agreement, the Plan of Share Exchangeattached as Exhibit A (the “Plan”) and the provisions of Va. Code Section 13.1-717,whereby the holders of shares of common stock of Wilson/Bennett will receivecash and common stock of Cardinal in exchange therefor; and

 

WHEREAS, the respective Boards of Directors ofWilson/Bennett and Cardinal have resolved that the transactions describedherein are in the best interests of the parties and their respectiveshareholders and have authorized and approved the execution and delivery ofthis Agreement.

 

NOW, THEREFORE, in consideration of the premises andthe mutual covenants and agreements set forth herein, the parties hereby agreeas follows:

 

**ARTICLE 1**

 

**The Share Exchange and RelatedMatters**

 

1.1**                                 TheShare Exchange**.  Subject tothe terms and conditions of this Agreement, at the Effective Date as defined inSection 1.2 hereof, each share of Wilson/Bennett Stock (as hereinafterdefined) will be exchanged for cash and Cardinal Common Stock (as hereinafterdefined) in accordance with Section 2.1 (the “Share Exchange”).  At the Effective Date, the Reorganizationshall have the effect provided in Section 13.1-721 of the Virginia StockCorporation Act.

 

1.2**                                 TheClosing and Effective****Date.**  The closing of the transactions contemplatedby this Agreement and the Plan shall take place at the offices of CardinalFinancial Corporation, 8270 Greensboro Drive, Suite 500, McLean, VA 22102,Virginia or at such other place as may be

 

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mutually agreed upon by the parties. Provided all of the conditions to the parties’ obligations to consummatethe Share Exchange have been satisfied, the closing shall occur sixty-five (65)days following the first notice Wilson/Bennett sends to its clients pursuant toSection 4.8 hereof.  The ShareExchange shall become effective on the date shown on the Certificate of ShareExchange issued by the State Corporation Commission of Virginia effecting the ShareExchange (the “Effective Date”).  Theclosing date and the Effective Date shall be the same.  All documents required by the terms of thisAgreement to be delivered at or prior to consummation of the Share Exchangewill be exchanged by the parties at the closing of the Share Exchange (the “ShareExchange Closing”), which shall be held on or before the Effective Date.  At the Share Exchange Closing, Cardinal andWilson/Bennett shall execute and deliver to the Virginia State CorporationCommission (the “SCC”) Articles of Share Exchange containing a Plan of ShareExchange in substantially the form of Exhibit A hereto.

 

1.3**                                 Definitions****.**  Any term definedanywhere in this Agreement shall have the meaning ascribed to it for allpurposes of this Agreement (unless expressly noted to the contrary).  In addition:

 

(a)                                  theterm “Affiliate” shall mean, with respect to Cardinal, any corporation of whichCardinal beneficially owns a majority of the voting stock.

 

(b)                                 theterm “Assets Under Management” shall mean the dollar amount of client assets asof the date of this Agreement with respect to which Wilson/Bennett providesservices as an investment adviser.

 

(c)                                  theterm “Cardinal” shall mean Cardinal Financial Corporation, a Virginiacorporation, and any corporation with which it may merge prior to the EffectiveDate.

 

(d)                                 theterm “Cardinal Common Stock” shall mean common stock of Cardinal, par value $1.00per share.

 

(e)                                  theterm “Consent” or “Consented” shall mean the written consent of aWilson/Bennett client to the Share Exchange or, in the case of an InvestmentContract which prohibits assignment or states by its terms that it terminatesupon assignment, the execution of an amendment to the existing InvestmentContract or a new Investment Contract effective upon the Effective Date.  The form and substance of the Consent shallbe determined by Wilson/Bennett, subject to the approval of Cardinal whichshall not be unreasonably withheld.

 

(f)                                    theterm “Fair Market Value”, with respect to shares of Cardinal Common Stock,shall mean the average closing sale price on the Nasdaq National Market for salesof Cardinal Common Stock for the twenty (20) days on which Cardinal CommonStock trades immediately preceding the fifth day before the Share ExchangeClosing, adjusted, if necessary, for any stock split or stock dividend, duringsuch twenty (20) day period; provided, however, that if such average is lessthan $9.00, Fair Market Value shall mean $9.00 and if such average is greaterthan $11.00, Fair Market Value shall mean $11.00.  The preceding floor and ceiling

 

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prices shall be adjusted for any stock split or stock dividend thatoccurs after the date of this Agreement and prior to the Effective Date.

 

(g)                                 “Knowledge”of a Person shall mean what the Person should have known after a reasonableinvestigation.

 

(h)                                 “MaterialAdverse Effect,” when used in reference to any party, shall mean or describe anevent, occurrence, or circumstance (including without limitation, any breach ofa representation or warranty contained herein by such party) which (1) hasan effect on the financial condition, results of operations, or business ofsuch party and its subsidiaries, that, if reduced to monetary damages, would bein excess of $25,000 or (2) would materially impair any party’s ability totimely perform its obligations under this Agreement or the consummation of anyof the transactions contemplated hereby; provided, that a MaterialAdverse Effect with respect to a party shall not include events or conditionsgenerally affecting the securities industry or the banking industry or effectsresulting from general economic conditions (including changes in interestrates), changes in accounting practices or changes to statutes, regulations orregulatory policies, that do not have a materially more adverse effect on suchparty than that experienced by similarly situated financial services companiesor investment advisers.

 

(i)                                     theterm “Person” shall mean any individual or entity.

 

(j)                                     theterm “Previously Disclosed” by aparty shall mean information set forth in a written disclosure letter that isdelivered by that party to the other party prior to or contemporaneously withthe execution of this Agreement and on a date not more than 30 days prior tothe Effective Date and, in each case, specifically designated as information “Previously Disclosed” pursuant tothis Agreement.

 

(k)                                  theterm “Shareholders” shall mean John W. Fisher and James B. Moloney.

 

(l)                                     theterm Wilson/Bennett Stock shall mean the Class A Stock, no par value, and Class BStock, no par value, of Wilson/Bennett.

 

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(m)                               Thecapitalized terms set forth below are defined in the following sections:

 
| Company Reports                     |   | Section 3.1(i)    |
|-------------------------------------|--------|------------------------|
| Investment Contracts                |   | Section 3.1(h)(1) |
| Lien                                |   | Section 3.1(b)(2) |
| Losses                              |   | Section 5.3(b)    |
| NASD                                |   | Section 3.1(i)    |
| Regulatory Authorities              |   | Section 3.1(g)(7) |
| SEC                                 |   | Section 3.1(g)(7) |
| Self-Regulatory Bodies              |   | Section 3.1(i)    |
| Territory                           |   | Section 3.1(m)(2) |
| Wilson/Bennett Financial Statements |   | Section 3.1(e)    |

 

**ARTICLE 2**

 

**Effect of Share Exchange on CommonStock**

 

2.1                                 **Conversion of Shares****. **(a)  Upon, and by reason ofthe Share Exchange becoming effective pursuant to the issuance of a Certificateof Share Exchange by the Virginia State Corporation Commission each share ofWilson/Bennett Stock issued and outstanding on the Effective Date shall beexchanged for a pro rata share of (y) shares of Cardinal Common Stock with aFair Market Value of Five Million Five Hundred Thousand Dollars ($5,500,000.00)and (z) One Million One Hundred Thousand Dollars ($1,100,000.00) in cash,subject to the adjustments described in Sections 2.1(b) and 2.1(c).

 

(b)                                 Ifthe tangible net worth of Wilson/Bennett on the Effective Date is less than$42,000, the value of the exchange consideration described in Section 2.1(a) shallbe reduced by $1.00 for every dollar of the deficiency.  If the tangible net worth of Wilson/Bennetton the Effective Date exceeds $42,000, the value of the exchange considerationshall be increased by $1.00 for every dollar of such excess.  Cardinal shall have the right after theEffective Date to audit the net worth of Wilson/Bennett as of the EffectiveDate.  The exchange consideration shallbe retroactively adjusted if such audit discloses any error or inaccuracy inthe balance sheet of Wilson/Bennett on the Effective Date.  Any such adjustment shall be settled by acash payment to or by the Shareholders. The parties intend that this subsection operate such that the netincome of Wilson/Bennett, computed according to generally accepted accountingprinciples, earned with respect to services performed by it before theEffective Date shall be paid out to the shareholders, as long as such paymentsdo not reduce the tangible net worth of Wilson/Bennett to less than$42,000.  For purposes of this Section 2.1(b),accounts receivable are included in tangible net worth.

 

(c)                                  Ifat the Effective Date, clients of Wilson/Bennett representing more than tenpercent (10%) of Assets Under Management shall have terminated or notifiedWilson/Bennett of an intent to terminate Investment Contracts, the exchangeconsideration described in Section 2.1 shall be reduced.  The reduced exchange consideration shall be

 

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calculated by multiplying $6,600,000 by a fraction, the numerator ofwhich is one hundred percent (100%) minus the percentage of Assets Under Managementheld by clients who have terminated or given notice of an intent to terminateInvestment Contracts and the denominator of which is 90%.

 

(d)                                 Ifthe exchange consideration described in Section 2.1(a) is adjustedpursuant to Section 2.1(b) or 2.1(c), the adjustment shall be to the cashportion of the exchange consideration and not to the aggregate Fair MarketValue of the shares of Cardinal Common Stock to be issued.

 

(e)                                  Sharesof Wilson/Bennett Stock issued and outstanding shall, by virtue of theReorganization, continue to be issued and outstanding shares and shall be heldby Cardinal.

 

2.2**                                 Mannerof Exchange.**  As promptly aspracticable after the Effective Date, Cardinal shall cause its stock transferagent, acting as the exchange agent (“Exchange Agent”), to send to each formershareholder of record of Wilson/Bennett immediately prior to the Effective Datetransmittal materials for use in exchanging such shareholder’s certificates of Wilson/BennettStock for the consideration set forth in Section 2.1 above and Section 2.3below.  Any fractional share checks whicha Wilson/Bennett shareholder shall be entitled to receive in exchange for suchshareholder’s shares of Wilson/Bennett Stock, and all dividends paid on anyshares of Cardinal Common Stock that such shareholder shall be entitled toreceive prior to the delivery to the Exchange Agent of such shareholder’scertificates representing all of such shareholder’s shares of Wilson/BennettStock will be delivered to such shareholder only upon delivery to the ExchangeAgent of the certificates representing all of such shares (or indemnitysatisfactory to Cardinal and the Exchange Agent, in their judgment, if any ofsuch certificates are lost, stolen or destroyed).  No interest will be paid on any suchfractional share checks or dividends to which the holder of such shares shallbe entitled to receive upon such delivery.

 

2.3**                                 FractionalShares****.** Cardinal shall not issue fractional shares.  Cardinal will pay the value of suchfractional shares in cash on the basis of the Fair Market Value per share ofCardinal Common Stock.

 

2.4**                                 Dividends****.**  No dividend orother distribution payable to the holders of record of Cardinal Common Stock ator as of any time after the Effective Date shall be paid to the holder of anycertificate representing shares of Wilson/Bennett Stock issued and outstandingat the Effective Date until such holder physically surrenders such certificatefor exchange as provided in Section 2.2 of this Agreement, promptly afterwhich time all such dividends or distributions shall be paid (withoutinterest).

 

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**ARTICLE 3**

 

**Representation and Warranties**

 

3.1**                                 Representationsand Warranties****of Wilson/Bennett.**  Each Shareholder and Wilson/Bennettrepresents and warrants to Cardinal as follows:

 

(a)                                  **Organization and Standing**.  (1)  Wilson/Bennett is a corporation,duly organized, validly existing and in good standing under Virginia law and isduly qualified to do business and is in good standing in the states of theUnited States and foreign jurisdictions where its ownership or leasing ofproperty or the conduct of its business requires it to be so qualified.Wilson/Bennett has the corporate power and authority necessary to carry on itsbusiness as it is now being conducted and to own all its material propertiesand assets.  Wilson/Bennett has in effectall federal, state, local, and foreign governmental authorizations necessaryfor it to own or lease its properties and assets and to carry on its businessas it is now conducted.

 

(2)                                  Allof the shares of capital stock of Wilson/Bennett are fully paid andnonassessable.

 

(b)**                                 Authority****.**  (1)  Theexecution and delivery of this Agreement and the Plan and the consummation ofthe Share Exchange have been duly and validly authorized by all necessarycorporate action on the part of Wilson/Bennett. The Agreement represents thelegal, valid, and binding obligations of Wilson/Bennett, enforceable againstWilson/Bennett in accordance with its terms (except in all such cases asenforceability may be limited by applicable bankruptcy, insolvency, ShareExchange, moratorium or similar laws affecting the enforcement of creditors’rights generally and except that the availability of the equitable remedy ofspecific performance or injunctive relief is subject to the discretion of thecourt before which any proceeding may be brought).

 

(2)**                                 **Theexecution, delivery and performance of this Agreement by Wilson/Bennett, andthe consummation of the transactions contemplated hereby, do not and will not (i) constitutea breach or violation of, or a default under, or cause or allow theacceleration or creation of any charge, mortgage, pledge, security interest,restriction, claim, lien, or encumbrance (a “Lien”) (with or without the givingof notice, passage of time or both) pursuant to any law, rule orregulation or any judgment, decree, order, governmental or non-governmentalpermit or license, or agreement, indenture or instrument of Wilson/Bennett, orto which Wilson/Bennett, or Wilson/Bennett’s properties is subject or bound, (ii) constitutea breach or violation of, or a default under, Wilson/Bennett’s charter orby-laws, or (iii) except as set forth in Exhibit B, require anyconsent or approval under any such law, rule, regulation, judgment, decree,order, governmental or non-governmental permit or license, or the consent orapproval of any other party to any such agreement, indenture or instrument.

 

(c)**                                  CapitalStructure****.**  The authorized capital stock ofWilson/Bennett consists of ten shares of Class A Stock, no par value, andten shares of Class B Stock, no par value, all of

 

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which, as of the date hereof, are issued, outstanding, fully paid andnonassessable, not subject to shareholder preemptive rights and were not issuedin violation of any agreement to which Wilson/Bennett is a party or otherwisebound, or of any registration or qualification provisions of any federal orstate securities laws. John W. Fisher is the record holder and beneficial ownerof ten shares of Class A Stock and eight shares of Class BStock.  James B. Moloney is the owner oftwo shares of Class B Stock.  Thereare no outstanding options, warrants or other rights to subscribe for orpurchase from Wilson/Bennett any capital stock of Wilson/Bennett or securitiesconvertible into or exchangeable for capital stock of Wilson/Bennett.

 

(d)**                                 Ownershipof the Stock****. **Except set forth in Exhibit B-1,Wilson/Bennett does not beneficially own, directly or indirectly, any of theoutstanding capital stock or other voting securities of any corporation orother organization.

 

(e)**                                  FinancialStatements****.  **Exhibit B-2 contains copies ofthe following financial statements of Bank (the “Wilson/Bennett FinancialStatements”):

 

(i)                                     BalanceSheets as of March 31, 2005 and December 31, 2004 and 2003;

 

(ii)                                  Statementsof Income for each of the quarters ended March 31, 2005 and 2005 and eachof the three years ended December 31, 2004, 2003 and 2002;

 

(iii)                               Statementsof Changes in Stockholders’ Equity for each of the quarters ended March 31,2005 and 2004 and each of the three years ended December 31, 2004, 2003and 2002; and

 

(iv)                              Statementsof Cash Flows for each of the three years ended December 31, 2004, 2003and 2002.

 

Such financial statements and the notes thereto havebeen prepared in accordance with generally accepted accounting principlesapplied on a consistent basis throughout the periods indicated.  Each of such statements of financialcondition, together with the notes thereto, presents fairly as of its date thefinancial condition and assets and liabilities of Wilson/Bennett.  Such statements of operations, statements ofstockholders’ equity and statements of cash flows, together with the notesthereto present fairly the results of operations of Wilson/Bennett for theperiods indicated.

 

(f)**                                    Absenceof Undisclosed Liabilities****.**  At March 31, 2005, Wilson/Bennett had noobligation or liability (contingent or otherwise) of any nature which was notreflected in the Wilson/Bennett Financial Statements, except for those which inthe aggregate are immaterial or have been Previously Disclosed.

 

(g)**                                 Legal****Proceedings****;****Compliance with Laws. **(1) There are no actions, suitsor proceedings instituted or pending or, to the best knowledge ofWilson/Bennett’s

 

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management, threatened against Wilson/Bennett, or against any property,asset, interest or right of Wilson/Bennett.   Wilson/Bennett is not a party toany agreement or instrument or subject to any judgment, order, writ,injunction, decree or rule that might reasonably be expected to have aMaterial Adverse Effect on the condition (financial or otherwise), business orprospects of Wilson/Bennett.

 

(2)                                  Wilson/Bennetthas not received notice of any claims against Wilson/Bennett by any present orformer client of Wilson/Bennett and there is no basis for any claim againstWilson/Bennett by any present or former client of Wilson/Bennett.

 

(3)                                  Theconduct of its business by Wilson/Bennett is not in violation, in any materialrespect, of any law, statute, ordinance, license, rule or regulation(including those of the Self-Regulatory Bodies).

 

(4)                                  Wilson/Bennetthas all permits, licenses, authorizations, orders and approvals of, and hasmade all filings, applications and registrations with, all RegulatoryAuthorities and Self-Regulatory Bodies that are required in order to permit itto own and operate its business as presently conducted.  All such permits, licenses, authorizations,orders and approvals are in full force and effect and no suspension orcancellation of any of them is threatened or reasonably likely.  All such filings, applications andregistrations are current.  Wilson/Bennettis in good standing with all relevant Regulatory Authorities and is a member ingood standing with all relevant Self-Regulatory Bodies.

 

(5)                                  Wilson/Bennetthas not received any notification or written communication (or, to itsknowledge, any other communication) from any Regulatory Authority orSelf-Regulatory Body (A) asserting that Wilson/Bennett is not incompliance with any of the statutes, rules, regulations, or ordinances whichsuch Regulatory Authority or Self-Regulatory Body enforces, or has otherwiseengaged in any unlawful business practice, (B) threatening to revoke anylicense, franchise, permit, governmental authorization, or other privilege, (C) requiringWilson/Bennett (including any of Wilson/Bennett’s directors or controllingpersons) to enter into a cease and desist order, agreement, or memorandum ofunderstanding (or requiring the board of directors thereof to adopt anyresolution or policy) or (D) restricting or disqualifying the activitiesof Wilson/Bennett.

 

(6)                                  Wilson/Bennettis not aware of any pending or threatened investigation, review or disciplinaryproceeding by any Regulatory Authority or Self-Regulatory Body againstWilson/Bennett or any officer, director or employee thereof.

 

(7)                                  NeitherWilson/Bennett nor any officer, director or employee thereof, is a party orsubject to any order, directive, decree, condition or similar arrangement oraction (other than exemptive orders) relating to the business ofWilson/Bennett, with or by any federal, state, local or foreign regulatoryauthority or industry trade group.

 

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(8)                                  Wilson/Bennettand each of its officers and employees who are required to be registered as aninvestment adviser, investment adviser representative or agent with theSecurities and Exchange Commission (the “SEC”), the securities commission ofany state or any Regulatory Authority or Self-Regulatory Body (the “RegulatoryAuthorities”), is duly registered as such and such registration is in fullforce and effect, and a list of all such registrations is disclosed in Exhibit C.  All federal, state and foreign registrationrequirements have been complied with in all material respects and suchregistrations as currently filed, and all periodic reports required to be filedwith respect thereto, are accurate and complete in all material respects.

 

(h)                                 **Investment Advisory Activities****.**  (1)  Disclosed in Exhibit D-1 is alisting of (i) all of the clients to which Wilson/Bennett providesinvestment management, investment advisory or sub-advisory services on the datehereof, and (ii) each contract or agreement, and all amendments thereto,in effect on the date hereof relating to Wilson/Bennett’s rendering ofinvestment advisory or management services (including without limitation allsub-advisory services) to any client (together with any such contract oragreement entered into after the date hereof, the “Investment Contracts”).  Each Investment Contract and any subsequentrenewal has been duly authorized, executed and delivered by Wilson/Bennett and,to Wilson/Bennett’s best knowledge, each other party thereto and, to the extentapplicable, has been adopted in compliance with any statute, order, ordinance, rule orregulation to which such Investment Contract is subject and is a valid andbinding agreement of Wilson/Bennett and each other party thereto, enforceablein accordance with its terms (subject to bankruptcy, insolvency, moratorium,fraudulent transfer and similar laws affecting creditors’ rights generally andto general equity principles).  Each ofWilson/Bennett and client party thereto is in compliance in all materialrespects with the terms of each Investment Contract to which it is a party, andis not currently in default under any of the terms of any such Investment Contract.  Each such Investment Contract is in fullforce and effect.  Except as disclosed inExhibit D-4, none of the Investment Contracts, or any other arrangementsor understandings relating to Wilson/Bennett’s rendering of investment advisoryor management services (including without limitation all sub-advisoryservices), contains any undertaking by a client to cap fees or to reimburse anyor all fees thereunder, and all such Investment Contracts or other arrangementsor understandings provide for the payment of fees.  Copies of each Investment Contract, includinga current fee schedule, have been supplied to Cardinal.  Except as Previously Disclosed,Wilson/Bennett is not an adviser or sub-adviser to any Investment Company.

 

(2)                                  Exceptas disclosed in Exhibit D-2, Wilson/Bennett has not received any notice(written or otherwise) that any client has terminated or is planning toterminate its relationship with Wilson/Bennett or will reduce materially itsuse of the services of Wilson/Bennett.

 

(3)                                  Wilson/Bennetthas properly administered, in all respects material and which could reasonablybe expected to be material to the business, operations or financial conditionof Wilson/Bennett, all accounts for which it acts as investment advisor, inaccordance with the terms of the governing documents and applicable law andregulation and common law.  To the best

 

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knowledge of Wilson/Bennett, neither Wilson/Bennett nor any director,officer or employee of Wilson/Bennett has committed any breach with respect toany such account.  The accountings foreach such account are true and correct in all respects and accurately reflectthe assets of such account in all respects.

 

(4)                                  Listedin Exhibit D-3 is each client that is subject to ERISA. The accounts ofeach such client have been managed by Wilson/Bennett in compliance in allmaterial respects with the applicable requirements of ERISA.

 

(5)                                  Nobasis exists upon which Wilson/Bennett would have any material liability to anyclient.

 

(6)                                  Wilson/Bennetthas adopted a formal code of ethics and a written policy regarding insidertrading, a copy of each of which has been provided or supplied toCardinal.  Such code and policy complywith Section 17(j) of the Investment Company Act of 1940 (as amended, the “InvestmentCompany Act”), and Rule 17j-1 thereunder, if applicable, and Section 204Aof the Investment Advisers Act of 1940 (as amended, the “Investment AdvisersAct”), respectively.  The policies ofWilson/Bennett with respect to avoiding conflicts of interest are as set forthin the most recent Form ADV thereof, as amended, a copy of which has beendelivered or made available to Cardinal, and Wilson/Bennett’s “soft-dollar”policies and arrangements satisfy the requirements of Section 28(e) ofthe Securities Exchange Act of 1934 (as amended, the “Exchange Act”) and allother applicable laws and regulations. There have been no violations or allegations of violations of suchpolicies.

 

(7)                                  Exceptas disclosed in Exhibit E, neither Wilson/Bennett nor any other person “associated”(as defined under the Investment Advisers Act) with Wilson/Bennett, has for aperiod not less than five years prior to the date hereof been convicted of anycrime or is or has been subject to any disqualification that would be a basisfor denial, suspension or revocation of registration of an investment adviserunder Section 203(e) of the Investment Advisers Act or Rule 206(4)-4(b) thereunderor of a broker-dealer under Section 15 of the Exchange Act, or for disqualificationas an investment adviser for any Investment Company pursuant to Section 9(a) ofthe Investment Company Act or as an investment adviser representative under anyapplicable state or federal law, and there is no basis for, or proceeding or investigationthat is reasonably likely to become the basis for, any such disqualification,denial, suspension or revocation.

 

(8)                                  Wilson/Bennettis not required to be registered as a broker-dealer under any state or federallaw.

 

(9)                                  All“wrap-fee” programs of Wilson/Bennett are and have been conducted in fullcompliance with Rule 3a-4 under the Investment Advisors Act and all otherapplicable law, including all disclosure and delivery requirements applicableto such programs. All disclosure documents and Investment Contracts relating tothe “wrap fee” programs for which the Wilson/Bennett serves as an adviser,sponsor or portfolio manager are set forth in Exhibit D-5,

 

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which identifies the program sponsors and underlying clients in respectof each “wrap fee” program sponsored by a third-party.

 

(10)                            Theaggregate amount of Assets Under Management by Wilson/Bennett are accuratelyset forth in Exhibit D-6 hereto, together with a brief summary of the feearrangements in effect with respect to each Investment Contract.

 

(i)                                     **Reports**.  Wilson/Bennetthas timely filed (and, for the past five (5) years each person associatedwith Wilson/Bennett has timely filed) all reports, registrations, statementsand other filings, together with any amendments required to be made withrespect thereto, with (i) the SEC, (ii) any other applicable federal,state or foreign securities, banking, insurance, or other regulatory authority,and (iii) the National Association of Securities Dealers, Inc. (“NASD”),or any other self-regulatory body or industry trade group (the “Self-RegulatoryBodies”)(all such reports and statements being collectively referred to hereinas the “Company Reports”), including without limitation all reports, registrations,statements and filings required under the Investment Company Act, theInvestment Advisers Act, or any applicable state securities.  To the knowledge of Wilson/Bennett and theShareholders, as of their respective dates, the Company Reports complied in allmaterial respects with the statutes, rules, regulations and orders enforced orpromulgated by the regulatory authority or Self-Regulatory Body with which theywere filed and did not contain any untrue statement of a material fact or omitto state any material fact necessary in order to make the statements madetherein, in light of the circumstances under which they were made, notmisleading.

 

(j)**                                     RegulatoryApprovals****.**  To the knowledge of Wilson/Bennett there isno reason why the regulatory approvals referred to in Section 6.1(a) shouldnot be obtained without the imposition of any condition of the type referred toin Section 6.1(a).

 

(k)**                                  LaborRelations****.**  Wilson/Bennett is not a party to or bound byany collective bargaining agreement, contract or other agreement orunderstanding with a labor union or labor organization, nor is it the subjectof a proceeding asserting that it has committed an unfair labor practice(within the meaning of the National Labor Relations Act) or seeking to compelit to bargain with any labor organization as to wages and conditions ofemployment, nor is there any strike or other labor dispute involving it pendingor, to the best of its knowledge, threatened, nor is it aware of any activityinvolving its employees seeking to certify a collective bargaining unit orengaging in any other organization activity.

 

(l)**                                     TaxMatters****.**  Wilson/Bennett has filed all federal, stateand local tax returns and reports required to be filed, and has paid all taxesshown by such returns to be due and payable. Except as Previously Disclosed, notax return or report of Wilson/Bennett is under examination by any taxingauthority or the subject of any administrative or judicial proceeding, and nounpaid tax deficiency has been asserted against Wilson/Bennett by any taxingauthority.

 

Wilson/Bennett (and any corporate predecessor ofWilson/Bennett) has been a validly electing S corporation within the meaning ofCode §§1361 and 1362 of the Internal Revenue

 

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Code at all times during its existence and Wilson/Bennett will be an Scorporation up to and including the Effective Date.

 

Wilson/Bennett shall not be liable for any tax underCode §1374 in connection with the deemed sale of Wilson/Bennett’s assets(including the assets of any qualified subchapter S subsidiary) caused by the§338(h)(10) election described in Section 4.11(b).  Neither Wilson/Bennett nor any qualifiedsubchapter S subsidiary of Wilson/Bennett has, in the past 10 years, (A) acquiredassets from another corporation in a transaction in which Wilson/Bennett’s taxbasis for the acquired assets was determined, in whole or in part, by referenceto the tax basis of the acquired assets (or any other property) in the hands ofthe transferor or (B) acquired the stock of any corporation that is aqualified subchapter S subsidiary.

 

(m)**                              **(1)   **Property****.**  Except as PreviouslyDisclosed or reserved against in the Wilson/Bennett Balance Sheet orWilson/Bennett Financial Statements, Wilson/Bennett has good and marketabletitle free and clear of all material liens, encumbrances, charges, defaults orequities of whatever character to all of the material properties and assets,tangible or intangible, reflected in the Wilson/Bennett Financial Statements asbeing owned by Wilson/Bennett as of the dates thereof.  To the best knowledge of Wilson/Bennett, allbuildings, and all fixtures, equipment, and other property and assets which arematerial to its business on a consolidated basis, held under leases or subleasesby Wilson/Bennett are held under valid instruments enforceable in accordancewith their respective terms (except as enforceability may be limited byapplicable bankruptcy, insolvency, reorganization, moratorium or similar lawsaffecting the enforcement of creditors’ rights generally and except that theavailability of the equitable remedy of specific performance or injunctiverelief is subject to the discretion of the court before which any proceedingmay be brought).  The buildings,structures, and appurtenances owned, leased, or occupied by Wilson/Bennett arein good operating condition and in a state of good maintenance and repair, andto the best knowledge of Wilson/Bennett (i) comply with applicable zoningand other municipal laws and regulations, and (ii) there are no latentdefects therein.

 

(2)                                  TheCompany has the right to use within the geographic territory in which itconducts its business (the “Territory”), and after consummation of thetransactions contemplated hereby will have the right to use in the Territory,free and clear of any claims of others, all patents, patent applications,trademarks, service marks (whether registered or unregistered), trade names,copyrights and other proprietary rights necessary to own and operate itsproperties and to carry on its business as currently conducted.

 

(3)                                  TheCompany owns or licenses all computer software developed or currently used byit which is material to the conduct of its business and has the right to usesuch software without infringing upon the intellectual property rights(including trade secrets rights) of a third party.

 

(n)                                 **Employee Benefit Plans****.**  (1) Wilson/Bennett will deliver forCardinal’s review, as soon as practicable, true and complete copies of allmaterial pension, retirement, profit-sharing, deferred compensation, stockoption, bonus, vacation or other material incentive plans or

 

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agreements, all material medical, dental or other health plans, alllife insurance plans and all other material employee benefit plans or fringebenefit plans, including, without limitation, all “employee benefit plans” asthat term is defined in Section 3(3) of the Employee RetirementIncome Security Act of 1974, as amended (“ERISA”), currently adopted,maintained, sponsored in whole or in part, or contributed to by Wilson/Bennettfor the benefit of employees, retirees or other beneficiaries eligible toparticipate (collectively, the “Wilson/Bennett Benefit Plans”).  Any of the Wilson/Bennett Benefit Plans whichis an “employee pension benefit plan,” as that term is defined in Section (32)of ERISA, is referred to herein as a “Wilson/Bennett ERISA Plan.”  No Wilson/Bennett Benefit Plan is or has beena multi-employer plan within the meaning of Section 3(37) of ERISA.

 

(2)                                  Exceptas Previously Disclosed, all Wilson/Bennett Benefit Plans are in compliancewith the applicable terms of ERISA and the Internal Revenue Code of 1986, asamended (the “IRC”) and any other applicable laws, rules and regulations,the breach or violation of which could result in a material liability toWilson/Bennett on a consolidated basis.

 

(3)                                  NoWilson/Bennett ERISA Plan is a defined benefit pension plan.

 

(o)**                                 InvestmentSecurities****. **Except as Previously Disclosed,none of the investment securities reflected in the Wilson/Bennett FinancialStatements is (i) subject to any restriction, contractual, statutory, orotherwise, which would impair materially the ability of the holder of suchinvestment to dispose freely of any such investment at any time or (ii) ofa type or in an amount that Cardinal would be prohibited from holding under theBank Holding Company Act of 1956 (as amended, the “Bank Holding Company Act”)or regulations of the Federal Reserve thereunder.

 

(p)                                 **Material Contracts**. Except as listed in Exhibit D-1 or as disclosed in Exhibit F,neither Wilson/Bennett nor any of its assets, businesses or operations, is aparty to, or is bound or subject to, or receives benefits under, any materialcontract, lease or agreement (i.e., a contract, lease oragreement providing for annual payments in excess of $25,000).  Copies of such contracts or agreements havebeen supplied or made available to Cardinal. Wilson/Bennett is not in defaultunder any such material contract, agreement, commitment, arrangement, lease,insurance policy or other instrument to which it is a party, by which itsassets, business or operations may be bound or subject to, or under which it orany of its assets, business or operations receives benefits, and there has notoccurred any event that, with the lapse of time or the giving of notice orboth, would constitute such a default by Wilson/Bennett.  Wilson/Bennett is not subject to or bound byany contract containing covenants which limit the ability of Wilson/Bennett tocompete in any line of business or with any person or which involves anyrestriction of geographical area in which, or method by which, Wilson/Bennettmay carry on its business (other than as may be required by law or anyapplicable regulatory authority).  Exceptas disclosed in Exhibit F, there are no contracts between any affiliate ofWilson/Bennett, on the one hand, and Wilson/Bennett on the other hand.

 

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(q)**                                 Insurance****.  **Wilson/Bennett isinsured with reputable insurers against such risks and in such amounts as themanagement of Wilson/Bennett reasonably has determined to be prudent inaccordance with industry practices. Disclosed in Exhibit G is a complete list, as of the date hereof,of the material insurance policies related to the business currently conductedby Wilson/Bennett (copies of which have been supplied to Cardinal).  Wilson/Bennett has not made any claim underany insurance policy and is not aware of any event or condition that is reasonablylikely to give rise to any such claim. Wilson/Bennett is not in default with respect to any provision containedin any such policy or binder and has not failed to give any notice or presentany claim under any such policy or binder in due and timely fashion.  Wilson/Bennett has not received notice ofcancellation or non-renewal of any such policy or binder.  Wilson/Bennett has no knowledge of anyinaccuracy in any application for such policies or binders, any failure to paypremiums when due or any similar state of facts or the occurrence of any eventthat is reasonably likely to form the basis for any material claim against itnot fully covered (except to the extent of any applicable deductible) by thepolicies or binders referred to above. Wilson/Bennett has not received notice from any of its insurancecarriers that any insurance premiums will be increased materially in the futureor that any such insurance coverage will not be available in the future onsubstantially the same terms as now in effect.

 

(r)**                                    Absenceof Material Changes and Events****.**  Since December 31, 2004, there has notbeen any material adverse change in the condition (financial or otherwise),aggregate assets or liabilities, assets under management, cash flow, earningsor business of Wilson/Bennett, and except for entering into this Agreement,Wilson/Bennett has conducted its business only in the ordinary courseconsistent with past practice.

 

(s)**                                  Brokersand Finders****.**  Neither Wilson/Bennett nor any of itsofficers, directors or employees, has employed any broker, finder or financialadvisor or incurred any liability for any fees or commissions in connectionwith the transactions contemplated herein.

 

(t)**                                    EnvironmentalMatters****. **(1)  There are no legal,administrative, arbitral or other claims, causes of action or governmentalinvestigations of any nature, seeking to impose, or that could result in theimposition, on Wilson/Bennett of any liability arising under any EnvironmentalLaws pending or, to the best knowledge of Wilson/Bennett, threatened against (A) Wilson/Bennett,(B) any person or entity whose liability for any Environmental ClaimWilson/Bennett has or may have retained or assumed either contractually or byoperation of law, or (C) any real or personal property which Wilson/Bennettowns or leases, or has been or is judged to have managed, supervised orparticipated in the management of, which liability might have a MaterialAdverse Effect on the business, financial condition or results of operations ofWilson/Bennett.  Wilson/Bennett is notsubject to any agreement, order, judgment, decree or memorandum by or with anycourt, governmental authority, regulatory agency or third party imposing anysuch liability.

 

(2)                                  Tothe best knowledge of Wilson/Bennett, there are no past or present actions,activities, circumstances, conditions, events or incidents, including, withoutlimitation, the release, emission, discharge or disposal of any Materials ofEnvironmental Concern, that could

 

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reasonably form the basis of any Environmental Claim or other claim oraction or governmental investigation that could result in the imposition of anyliability arising under any Environmental Laws currently in effect or adoptedbut not yet effective against Wilson/Bennett or against any person or entitywhose liability for any Environmental Claim Wilson/Bennett or anyWilson/Bennett Subsidiary has or may have retained or assumed eithercontractually or by operation of law.

 

(3)                                  Forthe purpose of this Agreement, the following terms shall have the followingmeanings:

 

(i)                                     “Communication”means a communication which is of a substantive nature and which is made (A) inwriting to Wilson/Bennett or any Wilson/Bennett Subsidiary on the one hand orto Cardinal or any Cardinal Subsidiary on the other hand, or (B) orally toa senior officer of Wilson/Bennett or any Wilson/Bennett Subsidiary or ofCardinal or any Cardinal Subsidiary, whether from a governmental authority or athird party.

 

(ii)                                  “EnvironmentalClaim” means any Communication from any governmental authority or third partyalleging potential liability (including, without limitation, potentialliability for investigatory costs, cleanup costs, governmental response costs,natural resources damages, property damages, personal injuries, or penalties)arising out of, based on or resulting from the presence, or release into theenvironment, of any Material of Environmental Concern.

 

(iii)                               “EnvironmentalLaws” means all applicable federal, state and local laws and regulations,including the Comprehensive Environmental Response, Compensation and LiabilityAct of 1980, as amended, that relate to pollution or protection of human healthor the environment (including, without limitation, ambient air, surface water,ground water, land surface or subsurface strata).  This definition includes, without limitation,laws and regulations relating to emissions, discharges, releases or threatenedreleases of Materials of Environmental Concern, or otherwise relating to the manufacture,processing, distribution, use, treatment, storage, disposal, transport orhandling of Materials of Environmental Concern.

 

(iv)                              “Materialsof Environmental Concern” means pollutants, contaminants, wastes, toxicsubstances, petroleum and petroleum products and any other materials regulatedunder Environmental Laws.

 

(u)                                 **Untrue Statements and Omissions**.  No representation or warranty contained in Section 3.1of this Agreement or information Previously Disclosed contains any untruestatement of a material fact or omits to state a material fact necessary tomake the statements therein, in light of the circumstances under which theywere made, not misleading.

 

(v)                                 **Books and Records**.  Wilson/Bennett has at all times during theprevious five (5) years maintained books and records which accuratelyreflect all its material transactions and account information in reasonabledetail, and has at all times maintained accounting controls, policies andprocedures reasonably designed to provide that (A) such transactions areexecuted in

 

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accordance with its management’s general or specific authorization, asapplicable, (B) such transactions are recorded in a manner which permitsthe preparation of financial statements in accordance with generally acceptedaccounting principles and applicable regulatory accounting requirements, and (C) thedocumentation pertaining thereto is retained, protected and duplicated inaccordance with applicable law.

 

3.2**                                 Representationsand Warranties of Cardinal****.**   Cardinal represents and warrants toWilson/Bennett as follows:

 

(a)**                                  Organization,Standing and Power****.**Cardinal is acorporation duly organized, validly existing and in good standing under thelaws of Virginia.  It has all requisitecorporate power and authority to carry on its business as now being conductedand to own and operate its assets, properties and business, and Cardinal hasthe corporate power and authority to execute and deliver this Agreement andperform the respective terms of this Agreement and of the Plan.  Cardinal is duly registered as a bank holdingcompany under the Bank Holding Company Act.

 

(b)**                                 Authority****.**  (1)   The execution and delivery of this Agreementand the Plan and the consummation of the Share Exchange have been duly andvalidly authorized by all necessary corporate action on the part ofCardinal.  The Agreement represents thelegal, valid, and binding obligation of Cardinal, enforceable against Cardinalin accordance with its terms (except in all such cases as enforceability may belimited by applicable bankruptcy, insolvency, Share Exchange, moratorium orsimilar laws affecting the enforcement of creditors’ rights generally andexcept that the availability of the equitable remedy of specific performance orinjunctive relief is subject to the discretion of the court before which anyproceeding may be brought).

 

(2)                                  Neitherthe execution and delivery of the Agreement, the consummation of thetransactions contemplated therein, nor the compliance by Cardinal with any ofthe provisions thereof will (i) conflict with or result in a breach of anyprovision of the Articles of Incorporation or Bylaws of Cardinal, (ii) exceptas Previously Disclosed, constitute or result in the breach of any term,condition or provision of, or constitute default under, or give rise to anyright of termination, cancellation or acceleration with respect to, or resultin the creation of any lien, charge or encumbrance upon, any property or assetsof the Cardinal Companies pursuant to (A) any note, bond, mortgage,indenture, or (B) any material license, agreement, lease or otherinstrument or obligation, to which any of the Cardinal Companies is a party orby which any of them or any of their properties or assets may be bound, or (iii) subjectto the receipt of the requisite approvals referred to in Section 4.6,violate any order, writ, injunction, decree, statute, rule or regulationapplicable to any of the Cardinal Companies or any of their properties orassets.

 

(c)**                                  CapitalStructure****.**  The authorized capital stock of Cardinalconsists of:   10,000,000 shares ofpreferred stock, par value $1.00 per share, none of which is outstanding and50,000,000 shares of Cardinal Common Stock, of which 18,530,794 shares areissued and outstanding, fully paid and nonassessable, not subject toshareholder preemptive rights, and not

 

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issued in violation of any agreement to which Cardinal is a party orotherwise bound, or of any registration or qualification provisions of anyfederal or state securities laws.  Theshares of Cardinal Common Stock to be issued upon consummation of the ShareExchange will have been duly authorized and, when issued in accordance with theterms of this Agreement, will be validly issued, fully paid and nonassessableand subject to no preemptive rights.

 

(d)**                                 FinancialStatements****.**  Cardinal has previously furnished toWilson/Bennett true and complete copies of its audited consolidated balancesheets and related consolidated statements of income, statements of cash flows,and statements of stockholders equity for the three year period ended December 31,2004 (together with the notes thereto, the “Cardinal Financial Statement”).  The Cardinal Financial Statements have beenprepared in conformity with generally accepted accounting principles applied ona consistent basis during the periods presented, and present fairly thefinancial position of Cardinal as of the respective dates thereof and theresults of its operations for the three year period then ended.

 

(e)**                                  RegulatoryApprovals****. **Cardinal knows of no reason whythe regulatory approvals referred to in Section 6.1(a) should not beobtained without the imposition of any condition of the type referred to in Section 6.1(a).

 

(f)**                                    Absenceof Material Changes and****Events. **Since December 31, 2004,there has not been any material adverse change in the condition (financial orotherwise), aggregate assets or liabilities, cash flow, earnings or business orCardinal, and Cardinal has conducted its business only in the ordinary courseconsistent with past practice.

 

(g)                                 **Absence of Claims****. **Cardinal has no knowledge of anyclaims, liabilities or contingent liabilities that are not reflected in theCardinal Financial Statements or incurred after December 31, 2004 in theordinary course of business that would have a Material Adverse Effect onCardinal.

 

**ARTICLE 4**

 

**Conduct Prior to the EffectiveDate**

 

4.1**                                 Accessto Records****; Current Information.**  (a)   Prior to the Effective Date, Cardinal, on theone hand, and Wilson/Bennett on the other, agree to give to the other partyreasonable access to all the premises and books and records (including taxreturns filed and those in preparation) of it and its subsidiaries and to causeits officers to furnish the other with such financial and operating data andother information with respect to the business and properties as the othershall from time to time request for the purposes of verifying the warrantiesand representations set forth herein; provided, however, that any suchinvestigation shall be conducted in such manner as not to interfereunreasonably with the operation of the respective business of the other.

 

(b)                                 Duringthe period from the date of this Agreement to the Effective Date, each ofWilson/Bennett and Cardinal shall, and shall cause its representatives to,promptly notify the

 

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other of (1) any material change in its business or operations, (2) anymaterial complaints, investigations or hearings (or communications indicatingthat the same may be contemplated) of any Regulatory Authority relating to it, (3) anydenial of any application filed by it with any Regulatory Authority withrespect to this Agreement, (4) the institution or the threat of materiallitigation involving or relating to it, or (5) any event or condition thatmight be reasonably expected to cause any of its representations or warrantiesset forth herein not to be true and correct as of the Effective Date (and willuse its best efforts to prevent or promptly remedy the same) or prevent it fromfulfilling its obligations hereunder; and in each case shall keep the otherinformed with respect thereto.

 

4.2**                                 Confidentiality****.**  Between the date ofthis Agreement and the Effective Date, Cardinal and Wilson/Bennett each willmaintain in confidence, and cause its directors, officers, employees, agentsand advisors to maintain in confidence, and not use to the detriment of theother party, any written, oral or other information obtained in confidence fromthe other party or a third party in connection with this Agreement or thetransactions contemplated hereby unless such information is already known tosuch party or to others not bound by a duty of confidentiality or suchinformation becomes publicly available through no fault of such party, unlessuse of such information is necessary or appropriate in making any filing orobtaining any consent or approval required for the consummation of thetransactions contemplated hereby or unless the furnishing or use of suchinformation is required by or necessary or appropriate in connection with legalproceedings.  If the Share Exchange isnot consummated, each party will return or destroy as much of such writteninformation as may reasonably be requested.

 

4.3.                              **Forbearances of Wilson****/Bennett**.  From the date hereof until the EffectiveDate, except as expressly contemplated by this Agreement, without the priorwritten consent of Cardinal, Wilson/Bennett will not:

 

(a)                                  **Ordinary Course**. Conduct the business of Wilson/Bennett other than in the ordinary andusual course or fail to use reasonable efforts to preserve intact its businessorganization and assets and maintain its rights, franchises and existingrelations with clients, customers, suppliers, employees and businessassociates, engage in any new activities or lines of business, or take anyaction reasonably likely to have a Material Adverse Effect upon Wilson/Bennett’sability to perform any of its material obligations under this Agreement.  Wilson/Bennett shall not engage in anybusiness or activity that is impermissible for a financial holding companyunder the Bank Holding Company Act or the rules and regulations of theBoard of Governors of the Federal Reserve System.  Upon request by Wilson/Bennett, Cardinal willpromptly advise Wilson/Bennett whether any particular business, activity orinvestment is impermissible for a financial holding company.

 

(b)                                 **Capital Stock**. Issue, sell or otherwise permit to become outstanding, or authorize thecreation of, any additional shares of capital stock of Wilson/Bennett or anyrights to acquire capital stock of Wilson/Bennett, or enter into any agreementwith respect to the foregoing, or permit any additional shares of capital stockof Wilson/Bennett to become subject

 

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to new grants of employee options, other rights to acquire capitalstock of Wilson/Bennett or similar stock-based employee rights.

 

(c)                                  **Stock Splits****, Etc**.  Directly or indirectly adjust, split, combine,redeem, reclassify, purchase or otherwise acquire, any shares of its capitalstock.

 

(d)                                 **Compensation****; Employment Agreements;Etc**.  Enter into, amend,modify or renew any employment, consulting, severance or similar agreements orarrangements with any director, officer or employee of Wilson/Bennett, or grantany salary, wage or other compensation increase or increase any employeebenefit (including incentive or bonus payments), except (1) for normalindividual increases in compensation to employees in the ordinary course ofbusiness consistent with past practice, or (2) for employment arrangementsfor newly hired employees in the ordinary course of business consistent withpast practice.

 

(e)                                  **Benefit Plans**. Enter into, establish, adopt or amend any pension, retirement, stockoption, stock purchase, savings, profit sharing, deferred compensation,consulting, bonus, group insurance or other employee benefit, incentive orwelfare contract, plan or arrangement, or any trust agreement (or similararrangement) related thereto, in respect of any director, officer or employeeof Wilson/Bennett.

 

(f)                                    **Dispositions**. Except for the sale of securities or other investments or assets in theordinary course of business consistent with past practice, sell, transfer, mortgage,encumber or otherwise dispose of or discontinue any of its material assets,business or properties.

 

(g)                                 **Acquisitions**. Except for the purchase of securities or other investments or assets inthe ordinary course of business consistent with past practice, acquire anymaterial assets, business, securities or properties of any other entity.

 

(h)                                 **Governing Documents**. Amend Wilson/Bennett’s Articles of Incorporation or By-Laws.

 

(i)                                     **Contracts**. Except in the ordinary course of business, enter into or terminate anymaterial contract or amend or modify in any material respect any of itsexisting material contracts.

 

(j)                                     **Claims**.  Settleany claim, action or proceeding, except for any claim, action or proceedinginvolving solely money damages in an amount, individually and in the aggregatefor all such settlements, not more than $25,000 and which is not reasonablylikely to establish an adverse precedent or basis for subsequent settlements.

 

(k)                                  **Adverse Actions**. Knowingly take any action that is intended or is reasonably likely to (1) resultin any of its representations and warranties set forth in this Agreement beingor becoming untrue in any material respect at any time at or prior to theEffective Date, (2) result in any of the conditions to the Share Exchangeset forth in Article 6 not

 

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being materially satisfied or (3) result in a material violationof any provision of this Agreement except, in each case, as may be required byapplicable law or regulation.

 

(l)                                     **Indebtedness**.  Incurany indebtedness for borrowed money or settle, modify or forgive anyindebtedness for borrowed money owed to Wilson/Bennett.

 

(m)                               **Commitments**. Agree, commit to or enter into any agreement to take any of the actionsprohibited by Sections 4.3(a) through (l).

 

(n)                                 **Payables**.  Failto pay all bills as they become due in the ordinary course of business.

 

4.4                                 **Forbearances of Cardinal**.  From the date hereof until the EffectiveDate, except as expressly contemplated by this Agreement, without the priorwritten consent of Wilson/Bennett, which consent shall not be unreasonablywithheld, Cardinal will not knowingly take any action that is intended or isreasonably likely to (1) result in any of its representations andwarranties set forth in this Agreement being or becoming untrue in any materialrespect at any time at or prior to the Effective Date, provided that Cardinalmay proceed with and consummate its pending public offering of Cardinal CommonStock, (2) result in any of the conditions to the Share Exchange set forthin Article 6 not being materially satisfied or (3) result in amaterial violation of any provision of this Agreement except, in each case, asmay be required by applicable law or regulation.

 

4.5**                                 NoSolicitation****. **Unless and until this Agreementshall have been terminated pursuant to its terms, neither Wilson/Bennett norany of its officers, directors, representatives or agents shall, directly orindirectly, (i) encourage, solicit or initiate discussions or negotiationswith any person other than Cardinal concerning any Share Exchange, shareexchange, sale of substantial assets, tender offer, sale of shares of capitalstock or similar transaction involving Wilson/Bennett, (ii) enter into anyagreement with any third party providing for a business combinationtransaction, equity investment or sale of a significant amount of assets, or (iii) furnishany information to any other person relating to or in support of suchtransaction.

 

4.6.                              **Regulatory Applications and Approvals**.  Each of the parties hereto, at its ownexpense, shall use its reasonable best efforts (A) promptly to prepare andsubmit any applications that may be required to the appropriate RegulatoryAuthorities for approval of the Share Exchange, and (B) promptly to makeall other appropriate filings to secure all other approvals, consents andrulings which are necessary for the consummation of the Share Exchange.  Each of Wilson/Bennett and Cardinal agrees tocooperate with the other and, subject to the terms and conditions set forth inthis Agreement, use its reasonable best efforts to prepare and file allnecessary permits, consents, orders, approvals and authorizations of, or anyexemption by, all third parties and Regulatory Authorities necessary oradvisable to consummate the transactions contemplated by this Agreement.  Each of Wilson/Bennett and Cardinal shallhave the right to review in advance, and to the extent practicable each willconsult with the other, in each case subject to applicable laws relating to theexchange of information, with respect to all written

 

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information submitted to any third party or any regulatory authoritiesin connection with the transactions contemplated by this Agreement.  In exercising the foregoing right, each ofthe parties hereto agrees to act reasonably and as promptly aspracticable.  Each party hereto agreesthat it will consult with the other party hereto with respect to the obtainingof all material permits, consents, approvals and authorizations of all thirdparties and regulatory authorities necessary or advisable to consummate thetransactions contemplated by this Agreement and each party will keep the otherparty apprised of the status of material matters relating to completion of thetransactions contemplated hereby.

 

4.7.                              **Client Consents**. As soon as reasonably practicable, but in no event later than ten (10) days,after the date of this Agreement, Wilson/Bennett shall notify its clients inwriting of the transactions contemplated by this Agreement.  Such notice shall be prepared byWilson/Bennett and approved by Cardinal before it is sent.  With such notice, Wilson/Bennett shall, incompliance with the Investment Advisers Act, request Consent of each suchclient to the Share Exchange and use its reasonable best efforts to obtain suchConsent.  In the case of InvestmentContracts which prohibit assignment or state by their terms that they terminateupon assignment, Wilson/Bennett shall use its reasonable best efforts to enterinto new Investment Contracts or amend such Investment Contracts to delete suchprohibition or provide that they shall not terminate, in each case effectiveupon the Effective Date.  Cardinal shallhave the right to approve the form of any such new Investment Contract.

 

Thirty (30) days after the notice described above,Wilson/Bennett shall, in writing, contact each client who has not returned a Consentto the Share Exchange and again request that the client give a Consent to theShare Exchange.

 

Within five (5) business days following theEffective Date Wilson/Bennett shall send a notice to each client for whom it isperforming services and who has not returned a Consent to the ShareExchange.  Such notice shall advise eachsuch client that the Share Exchange has become effective and state thatWilson/Bennett will continue to provide the same services on the same terms asbefore the Effective Date.  Sixty (60)days after the Effective Date, Wilson/Bennett shall send a notice to eachclient for whom it is performing services and who has not returned a Consent tothe Share Exchange.  Such notice shallprovide, in substance, that the client’s consent to the Share Exchange will beimplied from the client’s continued acceptance of Wilson/Bennett’s services.

 

All notices sent pursuant to this Section 4.8shall be by certified mail, return receipt requested and Wilson/Bennett shallretain all returned receipts.

 

4.8**                                 ShareExchange Consummation****. **Subject to the terms andconditions of this Agreement, each party shall use its best efforts in goodfaith to take, or cause to be taken, all actions, and to do or cause to be doneall things necessary, proper or desirable, or advisable under applicable laws,as promptly as practicable so as to permit consummation of the Share Exchangeat the earliest possible date, consistent with Section 1.2 herein, and tootherwise enable consummation of the transactions contemplated hereby and shallcooperate fully with the other party hereto to that

 

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end, and each of Wilson/Bennett and Cardinal shall use, and shall causeeach of their respective subsidiaries to use, its best efforts to obtain allconsents (governmental or other) necessary or desirable for the consummation ofthe transactions contemplated by this Agreement.

 

4.9                                 **Bank Accounts**. Wilson/Bennett intends to maintain its principal bank accounts with CardinalBank, a wholly-owned subsidiary of Cardinal, but shall be permitted to maintainaccounts at other banks.

 

4.10                           **Modification of Transaction****/Taxes**.**(a) Structure.**At the requestof Cardinal, Wilson/Bennett agrees to take such actions as may be reasonablynecessary to modify the structure of, or to substitute parties to (as long assuch substitute is Cardinal or a wholly-owned subsidiary of Cardinal) thetransactions contemplated hereby, provided that such modifications do notchange the Share Exchange Consideration or abrogate the covenants and otheragreements contained in this Agreement.

 

**(b)****                                  Section 338(h)(10) Election. **At Cardinal’s request, Shareholders shalljoin with Cardinal in making timely, effective and irrevocable elections under Section 338(h)(10) ofthe Code and any corresponding elections under state, local or foreign tax lawthat have substantially the same effect as an election under Section 338(h)(10) ofthe Code (collectively, a “Section 338(h)(10) Election”) with respectto Wilson/Bennett.  Cardinal, Wilson/Bennett and each Shareholderagree that the consideration given by Cardinal under Section 2.1 will beallocated to the assets of Wilson/Bennett by Cardinal in a manner consistentwith Internal Revenue Code §§338 and 1060 and the regulations thereunder.  Cardinal, Wilson/Bennett and each Shareholdershall file all tax returns (including amended returns and claims for refund)and information reports in a manner consistent with such allocation.

 

**(c)****                                  TaxPeriods Ending On or Before Effective Date**.  Each shareholder shall, jointly andseverally, indemnify Wilson/Bennett and/or Cardinal as applicable and hold themharmless from and against all and any taxes (or the non-payment thereof) ofWilson/Bennett for all taxable periods ending on or before the Effective Date.

 

**(d)****                                  Shareholders’Tax**.  Shareholders shall includeany income gain, loss, deduction, or other tax item resulting from the §338(h)(10) electionon their tax returns to the extent required by applicable law.  Shareholders shall also pay any tax imposedon Wilson/Bennett attributable to the making of the §338(h)(10) Election,including (i) any tax imposed under Code §1374, (ii) any tax imposedunder Treasury Regulation §1.338(h)(10-1(e)(5, or (iii) any state, localor foreign tax imposed on Wilson/Bennett’s gain.

 

4.11                           **Fiscal Year**. Wilson/Bennett will adopt a fiscal year ending December 31.

 

4.12                           **Demand Registration****. **The Shareholder and Cardinal shallhave entered an agreement in the form attached as Exhibit H under whichthe Shareholder shall have certain rights to require Cardinal to Registershares of the Cardinal Common Stock issued to him in the Share Exchange.

 

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4.13.                        **Exhibits****.**  Wilson/Bennett shall have updated allExhibits, except Exhibits A and H as of the Share Exchange Closing date.

 

**ARTICLE 5**

 

**Additional Agreements**

 

5.1**                                 BenefitPlans****. **Uponconsummation of the Share Exchange, as soon as administratively practicable andsubject to Cardinal’s best efforts, employees of Wilson/Bennett shall beentitled to participate in Cardinal pension, benefit, health and similar planson the same terms and conditions as employees of Cardinal and its subsidiaries,without waiting periods and giving effect to years of service withWilson/Bennett as if such service were with Cardinal; provided, however, thatno Wilson/Bennett employee shall receive credit for service with Wilson/Bennettfor benefit accrual purposes under any Cardinal defined benefit pensionplan.  Cardinal also shall causeWilson/Bennett to honor in accordance with their terms as in effect on the datehereof (or as amended after the date hereof with the prior written consent ofCardinal), all employment, severance, consulting and other compensationcontracts and agreements Previously Disclosed and executed in writing byWilson/Bennett on the one hand and any individual current or former director, officeror employee thereof on the other hand, copies of which have previously beendelivered by Wilson/Bennett to Cardinal.

 

5.2                                 **Restricted Stock**. The offer and sale of Cardinal Common Stock contemplated by thisAgreement is intended to be exempt from the registration requirements of theSecurities Act of 1933 and applicable state law.  Cardinal will not file any registrationstatement with the Securities and Exchange Commission or any state.  However, the parties will enter into theregistration rights agreement attached hereto as Exhibit H, whichobligates Cardinal to file a registration statement in certain cases.  Transfer of the shares of Cardinal CommonStock issued as hereunder will be restricted to the extent necessary to complywith the Securities Act of 1933 and any applicable state laws.  Each share certificate for shares of CardinalCommon Stock issued pursuant to this Agreement shall bear the following legend:

 

The shares of stock represented by this Certificatehave not been registered under the Securities Act of 1933, as amended (the “SecuritiesAct”), and no transfer, sale, assignment, pledge, hypothecation or otherdisposition of the shares represented by this Certificate may be made except (a) pursuantto an effective registration statement under the Securities Act and anyapplicable state securities laws or (b) pursuant to an exemption from theprovisions of Section 5 of the Securities Act, and the rules andregulations in effect thereunder, and applicable state securities laws.

 

Cardinal will not obstruct any lawful sale of the shares.

 

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5.3                                 **Indemnification****.**

 

(a)                                  Survivalof Representations, Warranties and Covenants.  All representations and warranties of theparties contained in this Agreement, including any exhibits made a part hereof,and any covenants or other agreements the performance of which is specified tooccur on or prior to the Effective Date, shall survive the Effective Date forthe applicable statute of limitations. Any covenant or other agreement herein any portion of the performance ofwhich may or is specified to occur after the Effective Date shall survive theEffective Date.

 

(b)                                 Obligationsof Shareholders.  Subject to Section 5.3(f),the Shareholders hereby agree, jointly and severally, to indemnify, defend andhold harmless Cardinal and its employees, officers, partners and otheraffiliates from and against any and all claims, losses, liabilities, costs,penalties, fines and expenses (including reasonable expenses for attorneys,accountants, consultants and experts), damages, obligations to third parties,expenditures, proceedings, taxes, judgments, awards or demands (collectively, “Losses”)which any of them may suffer, incur or sustain arising out of, attributable to,or resulting from: (a) any inaccuracy in or breach of any of therepresentations or warranties of the Shareholders and Wilson/Bennett made in orpursuant to this Agreement or in any other agreement, certificate or documentexecuted in connection herewith or (b) any breach or nonperformance of anyof the covenants or other agreements made by Wilson/Bennett in or pursuant tothis Agreement.

 

(c)                                  Obligationsof Cardinal.  Subject to Section 5.3(f),Cardinal hereby agrees to indemnify, defend and hold harmless each Shareholderfrom and against any and all Losses which he may suffer, incur or sustainarising out of, attributable to, or resulting from: (a) any inaccuracy inor breach of any of the representations or warranties of Cardinal made in orpursuant to this Agreement or in any other agreement, certificate or documentexecuted in connection herewith or (b) any breach or nonperformance of anyof the covenants or other agreements made by Cardinal in or pursuant to thisAgreement.

 

(d)                                 Procedure.  (i) Any party entitled to the benefitsof indemnification hereunder (an “Indemnified Party”) and seekingindemnification for any Losses or potential Losses from a claim asserted by athird party against the Indemnified Party (a “Third Party Claim”) shall givewritten notice to the party obligated to provide indemnification hereunder (an “IndemnifyingParty”) specifying in detail the source of the Loss or potential Loss under Section 5.3(b) orSection 5.3(c), as the case may be. Written notice to the Indemnifying Party of the existence of a ThirdParty Claim shall be given by the Indemnified Party promptly after notice ofthe potential claim; provided, however, that the Indemnified Party shall not beforeclosed from seeking indemnification pursuant to this Section 5.3 byany failure to provide such prompt notice of the existence of a Third PartyClaim to the Indemnifying Party except and only to the extent that theIndemnifying Party actually incurs an incremental out-of-pocket expense orotherwise has been materially damaged or prejudiced as a result of such delay.

 

(ii)                                  Defense.  Except as otherwise provided herein, theIndemnifying Party may elect to compromise or defend, at such Indemnifying

 

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Party’s own expense and by such Indemnifying Party’s own counsel (whichcounsel shall be reasonably satisfactory to the Indemnified Party), any ThirdParty Claim.  If the Indemnifying Partyelects to compromise or defend such Third Party Claim, it shall, within 30 daysafter receiving notice of the Third Party Claim (10 days if the IndemnifyingParty states in such notice that prompt action is required), notify theIndemnified Party of its intent to do so, and the Indemnified Party shallcooperate, at the expense of the Indemnifying Party, in the compromise of, ordefense against, such Third Party Claim. If the Indemnifying Party elects not to compromise or defend against thethird Party Claim, or fails to notify the Indemnified Party of its election todo so as herein provided, or otherwise abandons the defense of such Third PartyClaim, (A) the Indemnified Party may pay (without prejudice of any of itsrights as against the Indemnifying Party), compromise or defend such ThirdParty Claim (until such defense is assumed by the Indemnifying Party) and (B) thecosts and expenses of the Indemnified Party incurred in connection therewithshall be indemnifiable by the Indemnifying Party pursuant to the terms of thisAgreement.  Notwithstanding anything tothe contrary contained herein, in connection with any Third Party Claim inwhich the Indemnified Party shall reasonably conclude, based upon the writtenadvice of its counsel, that (x) there is a conflict of interest between theIndemnifying Party and the Indemnified Party in the conduct of the defense ofsuch Third Party Claim or (y) there are specific defenses available to theIndemnified Party which are different from or additional to those available tothe Indemnifying Party and which could be materially adverse to theIndemnifying Party, then the Indemnified Party shall have the right to assumeand direct the defense of such Third Party Claim.  In such an event, the Indemnifying Partyshall pay the reasonable fees and disbursements of counsel of the IndemnifyingParty and one counsel to all the Indemnified Parties.  Notwithstanding the foregoing, neither theIndemnifying Party nor the Indemnified Party may settle or compromise any claimover the objection of the other, provided, however, that consent to settlementor compromise shall not be unreasonably withheld by the Indemnified Party andprovided further, that if the sole settlement relief payable to a Third Partyin respect of such Third Party Claim is monetary damages that are paid in fullby the Indemnifying Party, the Indemnifying Party may settle such claim withoutthe consent of the Indemnified Party.  Inany event, except as otherwise provided herein, the Indemnified Party and theIndemnifying Party may each participate, at its own expense, in the defense ofsuch Third Party Claim.  If theIndemnifying Party chooses to defend any claim, the Indemnified Party shallmake available to the Indemnifying Party any personnel or any books, records orother documents within its control that are reasonably necessary or appropriatefor such defense, subject to the receipt of appropriate confidentialityagreements.

 

(iii)                               Miscellaneous.  The procedures set forth in Section 5.3(d)(i) and(ii) above shall apply solely with respect to Third Party Claims and shallnot be deemed to apply to, or otherwise affect or limit, an Indemnified Party’srights under this Agreement with respect to any claim other than a Third PartyClaim.

 

(iv)                              Noticeof Non-Third Party Claims. Any Indemnified Party seeking indemnificationfor any Loss or potential Loss arising from a claim asserted by any party tothis Agreement against the Indemnifying Party (a “Non-Third Party Claim”) shallgive written notice to the Indemnifying Party specifying in detail the sourceof the Loss or potential Loss under

 

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Section 5.3(b) or Section 5.3(c), as the case maybe.  Written notice to the IndemnifyingParty of the existence of a Non-Third Party Claim shall be given by theIndemnified Party promptly after the Indemnified Party becomes aware of thepotential claim; provided, however, that the Indemnified Partyshall not be foreclosed from seeking indemnification pursuant to this Section 5.3by any failure to provide such prompt notice of the existence of a Non-ThirdParty Claim to the Indemnifying Party except and only to the extent that theIndemnifying Party actually incurs an incremental out-of-pocket expense orotherwise has been materially damaged or prejudiced as a result of such.

 

(e)                                  Survivalof Indemnity.  Notwithstanding anythingto the contrary in this Article 5, no Indemnified Party shall have anyright to indemnification with respect to any matter as to which formal noticesatisfying the requirements of Section 5.3(d)(i) or Section 5.3(d)(iv) shallnot have been provided by the Indemnified Party to the Indemnifying Party priorto the expiration of the survival period set forth in Section 5.3(a).  Any matter as to which a claim has beenasserted by formal notice pursuant to Section 5.3(d) and within thetime limitation applicable by reason of the immediately preceding sentence thatis pending or unresolved at the end of any applicable limitation period underthis Section 5.3 or applicable law shall continue to be covered by this Section 5.3notwithstanding any applicable statue of limitations (which the parties herebywaive) until such matter is finally terminated or otherwise resolved by theparties under this Agreement or by a court of competent jurisdiction and anyamounts payable hereunder are finally determined and paid.

 

(f)                                    Minimumand Maximum Losses.  No party shallhave any right to seek indemnification under this Agreement for any inaccuracyin or breach of any representation or warranty made in or pursuant to thisAgreement or in any other agreement, certificate or document executed inconnection herewith or for the breach or nonperformance of the covenants orother agreements made in or pursuant to this Agreement until Losses of suchparty exceed $25,000, after which time only the aggregate amount of such lossesin excess of $25,000 shall be recoverable in accordance with the termshereof.  No party shall have the right torecover Losses in excess of $6,600,000 hereunder.  Notwithstanding the foregoing provisions ofthis sub-section (f), the Shareholders shall only be liable for Losses(regardless of whether covered by insurance) that Cardinal or Wilson/Bennettsustains as a result of a breach of Section 3.1(g)(2) or 3.1(h)(5) thatexceed $3,000,000 in aggregate and are no more than $6,600,000 in aggregate.

 

**ARTICLE 6**

 

**Conditions to the Share Exchange**

 

6.1**                                 Conditionsto Each Party****’s Obligations to Effectthe Share Exchange. **Therespective obligations of each of Cardinal and Wilson/Bennett to effect the ShareExchange and the other transactions contemplated by this Agreement shall besubject to the fulfillment or waiver at or prior to the Effective Date of thefollowing conditions:

 

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(a)**                                  RegulatoryApprovals****. **This Agreement and the Plan of ShareExchange shall have been approved, if required, by the Board of Governors ofthe Federal Reserve System and the Virginia State Corporation Commission, andany other regulatory authority whose approval is required for consummation ofthe transactions contemplated hereby, and such approvals shall not have imposedany condition or requirement which would so materially adversely impact theeconomic or business benefits of the transactions contemplated by thisAgreement as to render inadvisable the consummation of the Share Exchange in thereasonable opinion of the Board of Directors of Cardinal or Wilson/Bennett.

 

(b)**                                 Opinionsof Counsel****. **Wilson/Bennett shall havedelivered to Cardinal and Cardinal shall have delivered to Wilson/Bennettopinions of counsel, dated as of the Effective Date, as to such matters as theymay each reasonably request with respect to the transactions contemplated bythis Agreement and in a form reasonably acceptable to each of them.

 

(c)**                                  LegalProceedings****. **Neither Cardinal norWilson/Bennett shall be subject to any order, decree or injunction of a courtor agency of competent jurisdiction which enjoins or prohibits the consummationof the Share Exchange.

 

(d)                                 **Employment Agreement****.**  Cardinal and John W. Fisher shall haveentered into the Employment Agreement attached hereto as Exhibit I.

 

6.2**                                 Conditionsto Obligations of Cardinal****. **The obligations of Cardinal toeffect the Share Exchange shall be subject to the fulfillment or waiver at orprior to the Effective Date of the following additional conditions:

 

(a)**                                  Representationsand Warranties****. **Each of the representations andwarranties contained herein of the Shareholders and Wilson/Bennett shall betrue and correct as of the date of this Agreement and upon the Effective Datewith the same effect as though all such representations and warranties had beenmade on the Effective Date, except (i) for any such representations andwarranties made as of a specified date, which shall be true and correct as ofsuch date, (ii) as expressly contemplated by this Agreement, or (iii) forrepresentations and warranties the inaccuracies of which relate to mattersthat, individually or in the aggregate, do not materially adversely affect the ShareExchange and the other transactions contemplated by this Agreement, andCardinal shall have received a certificate or certificates signed by the ChiefExecutive Officer and Chief Financial Officer of Wilson/Bennett dated theEffective Date, to such effect.

 

(b)**                                 Performanceof Obligations****. **Wilson/Bennett shall haveperformed in all material respects all obligations required to be performed byit under this Agreement prior to the Effective Date, and Cardinal shall havereceived a certificate signed by the Chief Executive Officer of Wilson/Bennettto that effect.

 

(c)                                  **Client Consents****.**  Clients of Wilson/Bennett representing atleast seventy-five percent (75%) of Assets Under Management shall have Consentedto the Share Exchange.

 

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(d)                                 **Life Insurance****. **Wilson/Bennett shall have obtained,at Cardinal’s expense, a term life insurance policy on the life of John W.Fisher in an amount of no less than $3,000,000, which shall be renewableannually for at least five years. Cardinal shall be the sole beneficiary under such policy and the annualcost of such policy shall not exceed $10,000.

 

(e)                                  **Shareholder Vote****.**  Each Shareholder shall have voted all of hisshares of Wilson/Bennett Stock in favor of the Share Exchange.

 

6.3**                                 Conditions****to Obligations of Wilson****/Bennett**.  Theobligations of Wilson/Bennett to effect the Share Exchange shall be subject tothe fulfillment or waiver at or prior to the Effective Date of the followingadditional conditions:

 

(a)**                                  Representationsand Warranties**.  Each of therepresentations and warranties contained herein of Cardinal shall be true andcorrect as of the date of this Agreement and upon the Effective Date with thesame effect as though all such representations and warranties had been made onthe Effective date, except (i) for any such representations and warrantiesmade as of a specified date, which shall be true and correct as of such date, (ii) asexpressly contemplated by this Agreement, or (iii) for representations andwarranties the inaccuracies of which relate to matters that, individually or inthe aggregate, do not materially adversely affect the Share Exchange and theother transactions contemplated by this Agreement, and Wilson/Bennett shallhave received a certificate or certificates signed by the Chief ExecutiveOfficer and Chief Financial Officer of Cardinal dated the Effective Date, tosuch effect.

 

(b)**                                 Performanceof Obligations**.  Cardinalshall have performed in all material respects all obligations required to beperformed by it under this Agreement prior to the Effective Date, andWilson/Bennett shall have received a certificate signed by Chief ExecutiveOfficer of Cardinal to that effect.

 

**ARTICLE 7**

 

**Termination**

 

7.1**                                 Termination**.  Notwithstanding any other provision of thisAgreement, this Agreement may be terminated and the Share Exchange abandoned atany time prior to the Effective Date:

 

(a)                                  Bythe mutual consent in writing of the parties hereto.

 

(b)                                 ByCardinal or Wilson/Bennett (i) in the event of a material breach by theother party of any covenant or agreement contained in this Agreement, or (ii) inthe event of an inaccuracy of any representation or warranty of the other partycontained in this Agreement, which inaccuracy would provide the nonbreachingparty the ability to refuse to consummate the Share Exchange under theapplicable standard set forth in Section 6.2(a) in the case ofCardinal and

 

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Section 6.3(a) in the case of Wilson/Bennett; and, in thecase of (i) or (ii), if such breach or inaccuracy has not been cured bythe earlier of 30 days following written notice of such breach to the partycommitting such breach or the Effective Date.

 

(c)                                  Atany time prior to the Effective Date, by Cardinal or Wilson/Bennett in writing,if any of the conditions precedent to the obligations of the other party toconsummate the transactions contemplated hereby cannot be satisfied orfulfilled prior to the Share Exchange Closing, and the party giving the noticeis not in breach of any of its representations, warranties, covenants orundertakings herein.

 

(d)                                 Atany time, by either party hereto in writing, if any of the applications forprior approval referred to in Section 6.1(a) are denied, and the timeperiod for appeals and requests for reconsideration has run.

 

(e)                                  Atany time following July 31, 2005, by either party hereto in writing, ifthe Effective Date has not occurred by the close of business on such date, andthe party giving the notice is not in breach of any of its representations,warranties, covenants or undertakings herein.

 

7.2**                                 Effectof Termination**.  In the eventof the termination of this Agreement and the Share Exchange pursuant to Section 7.1,this Agreement shall become void and have no effect, except that (i) thelast sentence of Section 4.2 and all of Section 7.4 shall survive anysuch termination and (ii) a termination pursuant to Section 7.1(b) shallnot relieve or release the breaching party from any liability for an uncuredbreach of the covenant, agreement, understanding, representation or warrantygiving rise to such termination.

 

7.3                                 **Survival of Representations****, Warrantiesand Covenants. **Allrepresentations, warranties and covenants in this Agreement shall survive theEffective Date.

 

7.4**                                 Expenses**.  Each of the parties shall bear and pay allcosts and expenses incurred by it or on its behalf in connection with thetransactions contemplated herein, including fees and expenses of its ownconsultants, investment bankers, accountants and counsel.

 

**ARTICLE 8**

 

**General Provisions**

 

8.1**                                 EntireAgreement**.  This Agreementcontains the entire agreement among Cardinal, Surviving Corporation andWilson/Bennett with respect to the Share Exchange and the related transactionsand supersedes all prior arrangements or understandings with respect thereto.

 

8.2**                                 Waiverand Amendment**.  Any term orprovision of this Agreement may be waived in writing at any time by the partywhich is entitled to the benefits thereof, and this

 

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Agreement may be amended or supplemented by written instructions dulyexecuted by the parties hereto at any time, except statutory requirements andrequisite approvals of regulatory authorities.

 

8.3**                                 DescriptiveHeadings**.  Descriptiveheadings are for convenience only and shall not control or affect the meaningand construction of any provisions of this Agreement.

 

8.4**                                 GoverningLaw**.  Except as otherwiserequired or indicated herein, this Agreement shall be construed and enforcedaccording to the laws of the Commonwealth of Virginia.

 

8.5**                                 Notices**.  All notices or other communications which arerequired or permitted hereunder shall be in writing and sufficient if deliveredpersonally or sent by registered or certified mail, postage prepaid, addressedas follows:

 

If to Cardinal:

 

Bernard H. Clineburg

8270 Greensboro Drive, Suite 500

McLean, VA 22102

(Tel. 703- 584-3444

Mobile: (703) 403-0700

Bus Fax: (703) 584-3435

E-mail: bernard.clineburg@cardinalbank.com

 

Copy to:

 

Wayne A. Whitham, Jr.

Williams, Mullen, Clark & Dobbins

1021 East Cary Street

P.O. Box 1320

Richmond, VA 23210-1320

(Tel. 804-783-6473)

E-mail:wwhitham@williamsmullen.com

 

If to Wilson/Bennett:

 

John W. Fisher

201 N. Union Street, #230

Alexandria, VA 22314

(Tel. (703) 837-0150)

E-mail: jackfisher@wilsonbennett.net

 

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Copy to:

 

Janis Orfe

8280 Greensboro Dr., Suite 601

McLean, VA 22102

(Tel. 703-848-4220)

E-mail:jolaw@erols.com

 

8.6**                                 Counterparts**.  This Agreement may be executed in any numberof counterparts, each of which shall be an original, but such counterpartstogether shall constitute one and the same agreement.

 

IN WITNESS WHEREOF, the parties hereto have causedthis Agreement to be executed in counterparts by their duly authorized officersand their corporate seals to be affixed hereto, all as of the dates firstwritten above.

 
|      |   | Cardinal Financial Corporation               |                                  |
|-----------|--------|----------------------------------------------|---------------------------------------|
|      |   |                                         |                                  |   |
|      |   |                                         |                                  |   |
|      |   | By:                                          | /s/                                   |   |
|      |   |                                         | Bernard H.  Clineburg                 |   |
|      |   |                                         | Chairman and  Chief Executive Officer |
|      |   |                                         |                                  |   |
|      |   |                                         |                                  |   |
|      |   | By:                                          | /s/                                   |   |
|      |   |                                         | Robert A. Cern                        |   |
|      |   |                                         | Executive Vice  President             |   |
|      |   |                                         |                                  |   |
| ATTEST:   |   |                                         |                                  |   |
|      |   |                                         |                                  |   |
|      |   |                                         |                                  |   |
| /s/       |   |                                         |                                  |   |
| Secretary |   |                                         |                                  |   |
|      |   |                                         |                                  |   |
|      |   | Wilson/Bennett Capital Management, Inc. |                                  |
|      |   |                                         |                                  |   |
|      |   |                                         |                                  |   |
|      |   | By:                                          | /s/                                   |   |
|      |   |                                         | John W. Fisher,  President            |   |
|      |   |                                         |                                  |   |
| ATTEST:   |   |                                         |                                  |   |
|      |   |                                         |                                  |   |
|      |   |                                         |                                  |   |
| /s/       |   |                                         |                                  |   |
| Secretary |   |                                         |                                  |   |

 

31

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Each of theundersigned hereby agrees that he has made the representations and warrantiesset forth in Section 3.1 to induce Cardinal to enter into and perform thisAgreement and that he is personally bound by the provisions of 5.3 of thisAgreement.  Each Shareholder also agreesthat he will vote all of his shares of Wilson/Bennett Stock in favor of theShare Exchange.  By his signature hereto,Fisher, further, hereby waives any right he may have under Cardinal’s articlesof incorporation to be indemnified by Cardinal against any liability to Cardinalthat arises under this Agreement.

 
|   | /s/              |   |
|--------|------------------|--------|
|   | John W. Fisher   |   |
|   |             |   |
|   |             |   |
|   | /s/              |   |
|   | James B. Moloney |   |

 

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**EXHIBIT A**

 

**PLAN OF SHARE EXCHANGE**

**OF**

**WILSON/BENNETT CAPITALMANAGEMENT, INC.**

**AND**

**CARDINAL FINANCIAL CORPORATION**

 

Pursuant to this Plan of Share Exchange,Wilson/Bennett Capital Management, Inc., a Virginia corporation (“Wilson/Bennett”),shall become a wholly-owned subsidiary of Cardinal Financial Corporation (“Cardinal”),a Virginia corporation pursuant to a share exchange under Section 13.1-717of the Virginia Stock Corporation Act.

 

The term “Fair Market Value”, with respect to sharesof Cardinal Common Stock, shall mean the average closing sale price on theNasdaq National Market for sales of Cardinal Common Stock for the twenty (20)days on which Cardinal Common Stock trades immediately preceding the fifth daybefore the Share Exchange Closing, adjusted, if necessary, for any stock splitor stock dividend, during such twenty (20) day period; provided, however, thatif such average is less than $9.00, Fair Market Value shall mean $9.00 and ifsuch average is greater than $11.00, Fair Market Value shall mean $11.00.  The preceding floor and ceiling prices shallbe adjusted for any stock split or stock dividend that occurs after April 22,2005 and prior to the Effective Date.

 

**ARTICLE I**

 

1.1                                 **The Share Exchange**. Subject to the terms and conditions of the Agreement and Plan of ShareExchange, dated as of April     , 2005 betweenWilson/Bennett and Cardinal, at the Effective Date, Wilson/Bennett shall becomea wholly-owned subsidiary of Cardinal through the exchange of each outstandingshare of stock of Wilson/Bennett for cash and shares of the common stock ofCardinal in accordance with Section 2.1 of this Plan of Share Exchange andpursuant to Section 13.1-717 of the Virginia Stock Corporation Act (the “ShareExchange”).  At the Effective Date, theShare Exchange shall have the effect as provided in Section 13.1-721 ofthe Virginia Stock Corporation Act.

 

1.2                                 **Articles of Incorporation and Bylaws**.  The Articles of Incorporation and Bylaws ofCardinal in effect immediately prior to the consummation of the Share Exchangeshall remain in effect following the Effective Date until otherwise amended orrepealed.

 

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**ARTICLE 2**

 

2.1                                 **Conversion of Shares. **(a) Upon, and by reason of the Share Exchange becoming effective pursuant to theissuance of a Certificate of Share Exchange by the Virginia State CorporationCommission each share of Wilson/Bennett Class A Stock and Class BStock issued and outstanding on the Effective Date shall be exchanged for a prorata share of (y) shares of Cardinal Common Stock with a Fair Market Value ofFive Million Five Hundred Thousand Dollars ($5,500,000.00) and (z) One MillionOne Hundred Thousand Dollars ($1,100,000.00) in cash, subject to theadjustments described in Sections 2.1(b) and 2.1(c).

 

(b)                                 Ifthe tangible net worth of Wilson/Bennett on the Effective Date is less than$42,000, the value of the exchange consideration described in Section 2.1(a) shallbe reduced by $1.00 for every dollar of the deficiency.  If the tangible net worth of Wilson/Bennetton the Effective Date exceeds $42,000, the value of the exchange considerationshall be increased by $1.00 for every dollar of such excess.  Cardinal shall have the right after theEffective Date to audit the net worth of Wilson/Bennett as of the EffectiveDate.  The exchange consideration shallbe retroactively adjusted if such audit discloses any error or inaccuracy inthe balance sheet of Wilson/Bennett on the Effective Date.  Any such adjustment shall be settled by acash payment to or by the Shareholders. The parties intend that this subsection operate such that the netincome of Wilson/Bennett, computed according to generally accepted accountingprinciples, earned with respect to services performed by it before theEffective Date shall be paid out to the shareholders, as long as such paymentsdo not reduce the tangible net worth of Wilson/Bennett to less than$42,000.  For purposes of this Section 2.1(b),accounts receivable are included in tangible net worth.

 

(c)                                  Ifat the Effective Date, clients of Wilson/Bennett representing more than tenpercent (10%) of Assets Under Management shall have terminated or notifiedWilson/Bennett of an intent to terminate Investment Contracts, the exchangeconsideration described in Section 2.1 shall be reduced.  The reduced exchange consideration shall becalculated by multiplying $6,600,000 by a fraction, the numerator of which isone hundred percent (100%) minus the percentage of Assets Under Management heldby clients who have terminated or given notice of an intent to terminateInvestment Contracts and the denominator of which is 90%.

 

(d)                                 Ifthe exchange consideration described in Section 2.1(a) is adjustedpursuant to Section 2.1(b) or 2.1(c), the adjustment shall be to the cashportion of the exchange consideration and not to the aggregate Fair MarketValue of the shares of Cardinal Common Stock to be issued.

 

(e)                                  Sharesof Wilson/Bennett Class A Stock and Class B Stock issued andoutstanding shall, by virtue of the Share Exchange, continue to be issued andoutstanding shares and shall be held by Cardinal.

 

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**ARTICLE 3**

 

3.1**                                 Mannerof Conversion.**  As promptly aspracticable after the Effective Date, Cardinal shall cause its stock transferagent, acting as the exchange agent (“Exchange Agent”), to send to each formershareholder of record of Wilson/Bennett immediately prior to the Effective Datetransmittal materials for use in exchanging such shareholder’s certificates of Wilson/BennettClass A Stock and Class B. Stock for the consideration set forth in Section 3.1above and Section 3.3 below.  Anyfractional share checks which a Wilson/Bennett shareholder shall be entitled toreceive in exchange for such shareholder’s shares of Wilson/Bennett Class AStock and Class B, and all dividends paid on any shares of Cardinal CommonStock that such shareholder shall be entitled to receive prior to the deliveryto the Exchange Agent of such shareholder’s certificates representing all ofsuch shareholder’s shares of Wilson/Bennett Class A Stock and Class BStock will be delivered to such shareholder only upon delivery to the ExchangeAgent of the certificates representing all of such shares (or indemnitysatisfactory to Cardinal and the Exchange Agent, in their judgment, if any ofsuch certificates are lost, stolen or destroyed).  No interest will be paid on any suchfractional share checks or dividends to which the holder of such shares shallbe entitled to receive upon such delivery.

 

3.2**                                 FractionalShares.**  Cardinal shall issue cash inlieu of fractional shares.  Cardinal willpay the value of such fractional shares in cash on the basis of the Fair MarketValue per share of Cardinal Common Stock.

 

3.3**                                 Dividends.**  No dividend or other distribution payable tothe holders of record of Cardinal Common Stock at or as of any time after theEffective Date shall be paid to the holder of any certificate representingshares of Wilson/Bennett Class A Stock or Class B Stock issued andoutstanding at the Effective Date until such holder physically surrenders suchcertificate for exchange as provided in Section 3.2, promptly after whichtime all such dividends or distributions shall be paid (without interest).

 

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**EXHIBIT H**

 

**REGISTRATIONRIGHTS AGREEMENT**

 

THIS REGISTRATION RIGHTS AGREEMENT (the “Agreement”),dated as of April     , 2005, is made between CardinalFinancial Corporation, a Virginia corporation (the “Company”), John W. Fisher (“Fisher”)and James B. Moloney (“Moloney”).

 

W I T N E S S E T H:

 

WHEREAS, the Company and Wilson/Bennett CapitalManagement, Inc., a Virginia corporation (“Wilson/Bennett”), entered intoan Agreement and Plan of Share Exchange dated April     ,2005 (the “Share Exchange Agreement”), pursuant to which the Company acquiredWilson/Bennett; and

 

WHEREAS, pursuant to the Share Exchange Agreement,Fisher and Moloney, as the sole shareholders of Wilson/Bennett (collectively,the Shareholders”), acquired an aggregate of                     shares of Common Stock (as hereinafter defined); and

 

WHEREAS, the Company has agreed to enter into thisAgreement to provide certain registration rights to the Shareholders in orderto facilitate the distribution of the shares of Common Stock acquired by them pursuantto the Share Exchange Agreement.

 

NOW, THEREFORE, in consideration of the mutualcovenants and agreements set forth herein, the Company and the Shareholdershereby agree as follows:

 

**ARTICLE I**

 

**Definitions**

 

Except as otherwise specified herein, capitalizedterms used in this Agreement shall have the respective meanings assigned tosuch terms in the Share Exchange Agreement. For purposes of this Agreement, the following terms have the followingmeanings:

 

(a)                                  “Affiliate”shall have the meaning ascribed to such term in Rule 12b-2 under theExchange Act as in effect on the date of this Agreement.

 

(b)                                 “BlueSky Filing” shall mean a filing made in connection with the registration orqualification of the Registrable Shares under a particular state’s securitiesor blue sky laws.

 

(c)                                  “CommonStock” shall mean the Common Stock, par value $1.00 per share, of the Company.

 

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(d)                                 “EffectivePeriod,” with respect to the Registrable Shares, shall mean the period from thedate of effectiveness of the Registration Statement relating to the RegistrableShares under Section 2.2 below to the date that is two years from the dateof such effectiveness; provided, that, for each Holdback Period requiredby the Company under Article III of this Agreement and for eachDiscontinuance Period (as defined in Section 2.4(k) below), the EffectivePeriod shall be extended by the number of days during which the applicableHoldback Period or Discontinuance Period was in effect.

 

(e)                                  “ExchangeAct” shall mean the Securities Exchange Act of 1934, as amended.

 

(f)                                    “Nasdaq”shall mean the Nasdaq Stock Market.

 

(g)                                 “Person”shall have the meaning set forth in Section 3(a)(9) of the ExchangeAct as in effect on the date of this Agreement, and shall include, withoutlimitation, corporations, partnerships, limited liability companies and trusts.

 

(h)                                 “Prospectus”shall mean the prospectus included in a Registration Statement (including aprospectus that discloses information previously omitted from a prospectusfiled as part of an effective registration statement in reliance upon Rule 430Aunder the Securities Act), as amended or supplemented by any prospectussupplement, with respect to the terms of the offering of any portion of theRegistrable Shares covered by such Registration Statement, and all otheramendments and supplements to such prospectus, including post-effectiveamendments, and all material incorporated by reference or deemed to beincorporated by reference in any such prospectus.

 

(i)                                     “RegistrableShares” shall mean the shares of Common Stock that the Shareholders acquiredfrom the Company pursuant to the Share Exchange Agreement and such additionalshares of Common Stock that the Company may issue with respect to such shares pursuantto any stock splits, stock dividends, recapitalizations, restructurings,reclassifications or similar transactions.

 

(j)                                     “RegistrationStatement” shall mean a registration statement of the Company under theSecurities Act that covers the resale of the Registrable Shares pursuant to theterms of this Agreement, including the related Prospectus, all amendments andsupplements to such registration statement, including pre- and post-effectiveamendments, all exhibits thereto and all material incorporated by reference ordeemed to be incorporated by reference in such registration statement.

 

(k)                                  “SEC”shall mean the Securities and Exchange Commission.

 

(l)                                     “SecuritiesAct” shall mean the Securities Act of 1933, as amended.

 

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**ARTICLE II**

 

**Registration of Securities**

 

**Section 2.1.****                                SecuritiesSubject to this Agreement**.  Thesecurities entitled to the benefits of this Agreement are the RegistrableShares.  For the purposes of thisAgreement, one or more of the Registrable Shares will no longer be subject tothis Agreement when and to the extent that (i) a Registration Statementcovering such Registrable Shares has been declared effective under theSecurities Act and such Registrable Shares have been sold pursuant to sucheffective Registration Statement, (ii) such Registrable Shares aredistributed to the public pursuant to Rule 144 under the Securities Act, (iii) suchRegistrable Shares shall have been otherwise transferred or disposed of, newcertificates therefor not bearing a legend restricting further transfer ordisposition shall have been delivered by the Company and, at such time,subsequent transfer or disposition of such securities shall not requireregistration or qualification of such Registrable Shares under the SecuritiesAct or any similar state law then in force, or (iv) such RegistrableShares have ceased to be outstanding.

 

**Section 2.2.****                                DemandRegistration**.

 

(a)                                  TheShareholders shall have the right to make one written request to the Companyfor the registration of Registrable Shares subject to this Agreement that arebeneficially owned by the Shareholders at the time of the request, subject tothe following provisions:

 

(1)                                  Themaximum number of Registrable Shares that may be included in such writtenrequest shall be one-third of such shares; provided, however, that, in theevent that (i) a Change of Control (as defined below) has occurred withrespect to the Company or (ii) the Company’s employment of Bernard H.Clineburg as its the chief executive officer has terminated for any reason,such maximum number shall be all of such shares.

 

(2)                                  For purposes of this Section 2.2, aChange of Control occurs if (i) any person, including a “group” as definedin Section 13(d)(3) of the Exchange Act becomes the owner orbeneficial owner of Common Stock having 40% or more of the combined votingpower of the then outstanding Common Stock that may be cast for the election ofthe Company’s directors other than a result of an issuance of securitiesinitiated by the Company, or open market purchases approved by the Company’sBoard of Directors, as long as the majority of the Board of Directors approvingthe purchases is a majority at the time that the purchases are made; or (ii) asthe direct or indirect result of, or in connection with, a tender or exchangeoffer, a merger or other business combination, a sale of assets, a contestedelection of directors, or any combination of these events, the persons who weredirectors of the Company before such events cease to constitute a majority ofthe Company’s Board of Directors, or any successor’s board, within two years ofthe last of such transactions.  Forpurposes of Section 2.2(a)(1) above, a Change of Control occurs onthe date on which an event described in (i) or (ii) aboveoccurs.  If a Change of Control occurs onaccount of a series of transactions or events, the Change of Control occurs onthe date of the last of such transactions or events.

 

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(3)                                  Themaximum number of Registrable Shares subject to this Section 2.2(a) shallbe subject to adjustment in the event that the Company issues additional shareswith respect to such shares pursuant to any stock splits, stock dividends,recapitalizations, restructurings, reclassifications or similar transactions.

 

(b)                                 TheShareholders shall have the right to make one additional request to the Companyfor the registration of Registrable Shares subject to this Agreement that arebeneficially owned by the Shareholders at the time of the request, providedthat the Shareholders have previously made a request under Section 2.2(a) aboveand subsequent to that request either (i) a Change of Control (as definedbelow) has occurred with respect to the Company or (ii) the Company’semployment of Bernard H. Clineburg as its the chief executive officer hasterminated for any reason.  The maximumnumber of Registrable Shares that may be included in such additional requestshall be all of the Registrable Shares, less any shares included in the priorrequest made under Section 2.2(a) above.

 

(c)                                  TheCompany shall have the option to purchase the shares of Common Stock covered bya request under either Section 2.2(a) or (b) above directly fromthe Shareholders.  In order to exercisethis option, the Company shall provide the Shareholders with written notice ofits intention to do so to the Shareholders within 10 days of the receipt ofsuch request.  The purchase of suchshares by the Company shall be completed with 30 days of the receipt of suchrequest, and the purchase price for the shares shall be the average closingsale price on Nasdaq for sales of shares of Common Stock for the 20 days onwhich shares of Common Stock trade immediately preceding the fifth day beforethe date of such written notice from the Company, adjusted, if necessary, forany stock split or stock dividend, during such twenty (20) day period.

 

(d)                                 Uponthe receipt of a request described in Section 2.2(a) or (b) above,and to the extent that the Company has not exercised the option set forth in Section 2.2(c) above,the Company shall (i) within 45 days of such request, file a RegistrationStatement with the SEC under the Securities Act to register the resale of theRegistrable Shares as set forth in such request and (ii) use its bestefforts to cause such Registration Statement to become effective as soon aspracticable after the filing thereof with the SEC.  On or before the Closing Date, the Companyshall have listed on Nasdaq, on a when issued basis, the Registrable Shares(except to the extent that such Registrable Shares have been listedpreviously).

 

(e)                                  TheCompany shall use its best efforts to maintain the effectiveness of theRegistration Statement relating to the Registrable Shares, and maintain thelisting of such shares, as applicable, on Nasdaq or any exchange or automatedinterdealer quotation system on which the Common Stock is then listed orquoted, during the Effective Period.

 

(f)                                    TheCompany shall not be obligated to register any of the Registrable Shares heldby an Affiliate of the Shareholders.

 

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**Section 2.3.****                                RegistrationProcedures**.  In order to comply withthe requirements of Section 2.2 above, the Company will:

 

(a)                                  prepareand file with the SEC a Registration Statement covering the Registrable Shareson Form S-3, if the Company is eligible to use such form, or such otherform or forms for which the Company then qualifies and that counsel for theCompany shall deem appropriate, and which form shall be available for the saleof the Registrable Shares on a delayed or continuous basis in accordance with Rule 415under the Securities Act (or any successor rule); provided, however,that the methods of distribution permitted by such Registration Statement shallnot include underwritten offerings.

 

(b)                                 prepareand file with the SEC pre- and post-effective amendments to the RegistrationStatement and such amendments and supplements to the Prospectus used inconnection therewith as may be required by the rules, regulations orinstructions applicable to the registration form utilized by the Company, or bythe Securities Act or the rules and regulations thereunder, and cause theProspectus as so supplemented to be filed pursuant to Rule 424 under theSecurities Act, and otherwise comply with the provisions of the Securities Actwith respect to the disposition of the Registrable Shares;

 

(c)                                  furnishto the Shareholders such number of copies of the Registration Statement andeach pre- and post-effective amendment thereto, any Prospectus or Prospectussupplement and each amendment thereto and such other documents as theShareholders may reasonably request in order to facilitate the transfer ordisposition of the Registrable Shares by the Shareholders;

 

(d)                                 makesuch Blue Sky Filings, if necessary, to register or qualify the RegistrableShares under such state securities or blue sky laws of such jurisdictions asthe Shareholders may reasonably request, and do any and all other acts that maybe reasonably necessary or advisable to enable the Shareholders to consummatethe transfer or disposition in such jurisdictions of the Registrable Shares,except that the Company shall not for any such purpose be required (i) toqualify generally to do business as a foreign corporation in any jurisdictionwhere, but for the requirements of this Section 2.3(d), it would not beobligated to be so qualified, (ii) to subject itself to taxation in anysuch jurisdiction, or (iii) to consent to general service of process inany such jurisdiction;

 

(e)                                  notifythe Shareholders, at any time when a Prospectus is required to be deliveredunder the Securities Act with respect to one or more of the Registrable Shares,of the Company’s becoming aware that a Prospectus included in the RegistrationStatement, as then in effect, includes an untrue statement of a material factor omits to state a material fact necessary in order to make the statementstherein, in the light of the circumstances under which they were made, notmisleading, and prepare and furnish to the Shareholders a reasonable number ofcopies of an amendment to such Prospectus as may be necessary so that, asthereafter delivered to the purchasers of such Registrable Shares, suchProspectus shall not include an untrue statement of a

 

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material fact or omit to state a material fact necessary in order tomake the statements therein, in the light of the circumstances under which theywere made, not misleading;

 

(f)                                    notifythe Shareholders

 

(1)                                  whenany Prospectus or Prospectus supplement or pre- or post-effective amendment hasbeen filed, and, with respect to the Registration Statement or any post-effectiveamendment, when such Registration Statement or post-effective amendment hasbecome effective;

 

(2)                                  ofany request by the SEC or any other applicable regulatory authority foramendments or supplements to the Registration Statement or Prospectus or foradditional information;

 

(3)                                  ofthe issuance by the SEC or any other applicable regulatory authority of anystop order of which the Company or its counsel is aware suspending theeffectiveness of the Registration Statement or any order preventing the use ofa related Prospectus, or the initiation or any threats of any proceedings forsuch purpose; and

 

(4)                                  ofthe receipt by the Company of any written notification of the suspension of theregistration or qualification of any of the Registrable Shares for sale in anyjurisdiction, or the initiation or any threats of any proceeding for suchpurpose;

 

(g)                                 makegenerally available to the Company’s shareholders, as soon as reasonablypracticable, an earnings statement that shall satisfy the provisions of Section 11(a) ofthe Securities Act, provided that the Company shall be deemed to have compliedwith this Section 2.3(g) if it has complied with Rule 158 underthe Securities Act;

 

(h)                                 providefor the Company’s transfer agent at the time to serve as transfer agent andregistrar for the Registrable Shares covered by the Registration Statement nolater than the effective date of such Registration Statement;

 

(i)                                     cooperatewith the Shareholders to facilitate the timely preparation and delivery ofcertificates (not bearing any restrictive legends) representing the securitiesto be sold under the Registration Statement, and enable such securities to bein such denominations and registered in such names as the Shareholders mayreasonably request;

 

(j)                                     providethe Shareholders and any attorney, accountant or other agent retained by theShareholders (collectively, the “Inspectors”) with reasonable access duringnormal business hours to appropriate officers of the Company and itssubsidiaries to ask questions and to obtain information that any such Inspectormay reasonably request and make available for inspection all financial andother records, pertinent corporate documents and properties of any of theCompany and its subsidiaries (collectively, the “Records”), as shall bereasonably necessary to enable them to exercise their due diligenceresponsibility; provided, however, that the Records that the

 

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Company determines, in good faith, to be confidential and that itnotifies the Inspectors in writing are confidential shall not be disclosed toany Inspector unless such Inspector signs or is otherwise bound by aconfidentiality agreement reasonably satisfactory to the Company; and

 

(k)                                  inthe event of the issuance of any stop order of which the Company or its counselis aware suspending the effectiveness of the Registration Statement or anyorder suspending or preventing the use of any related Prospectus or suspendingthe registration or qualification of any Registrable Shares for sale in anyjurisdiction, the Company promptly will use its best efforts to obtain itswithdrawal.

 

The Shareholders shall furnish to the Company inwriting such information regarding the Shareholders and their Affiliates as isrequired to be disclosed pursuant to the Securities Act. The Shareholders agreeto notify the Company promptly of any inaccuracy or change in informationpreviously furnished by the Shareholders to the Company or of the happening ofany event in either case as a result of which the Registration Statement, aProspectus, or any amendment or supplement thereto contains an untrue statementof a material fact regarding the Shareholders or any of their Affiliates oromits to state a material fact regarding the Shareholders or any of theirAffiliates required to be stated therein or necessary to make the statementstherein not misleading and to furnish promptly to the Company any additionalinformation required to correct and update any previously furnished informationor required so that such Registration Statement, Prospectus, or amendment orsupplement, shall not contain, with respect to the Shareholders or any of theirAffiliates, an untrue statement of a material fact or omit to state a materialfact required to be stated therein or necessary to make the statements thereinnot misleading.

 

The Shareholders agree that, upon receipt of any noticefrom the Company of the happening of any event of the kind described inSections 2.3(e) or (k) above, the Shareholders will forthwith discontinue(and cause any Affiliate to discontinue) the transfer or disposition of anyRegistrable Shares pursuant to the Prospectus relating to the RegistrationStatement covering such Registrable Shares until the Shareholders’ receipt ofthe copies of the amended or supplemented Prospectus contemplated by Section 2.3(e) orthe withdrawal of any order contemplated by Section 2.3(k), and, if sodirected by the Company, the Shareholders will deliver to the Company allcopies, other than permanent file copies then in the Shareholders’ possession,of the Prospectus covering such Registrable Shares at the time of receipt ofsuch notice.  The period during which anydiscontinuance under this paragraph is in effect is referred to herein as a “DiscontinuancePeriod.”

 

**Section 2.4.****                                RegistrationExpenses**.  In connection with theregistration of the Registrable Shares pursuant to Section 2.2 above, theCompany will pay any and all out-of-pocket expenses incident to the Company’sperformance of or compliance with this Agreement, including, withoutlimitation, (i) all registration and filing fees with the SEC relating tothe Registrable Shares, (ii) all fees and expenses of complying with statesecurities or blue sky laws, (iii) all printing and delivery expenses, (iv) allfees and expenses incurred in connection with the listing of the RegistrableShares on Nasdaq, or any other exchange or automated interdealer quotationsystem as then applicable, (v) the fees and disbursements of the Company’s

 

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counsel and of its independent public accountants, and (vi) thefees and expenses of any special experts retained by the Company in connectionwith the requested registration, and the Shareholders shall pay any and all out-of-pocketexpenses incurred by the Shareholders, including, without limitation, (x) allfees or disbursements of counsel to the Shareholders and (y) all brokeragecommissions, fees and expenses and all transfer taxes and documentary stamptaxes, if any, relating to the sale or disposition of the Registrable Shares.

 

**ARTICLE III**

 

**Holdback Period**

 

If one or more underwritten public offerings of sharesof Common Stock (other than the Registrable Shares) by the Company occur duringthe Effective Period, then, in connection with each such public offering, theCompany may require the Shareholders to refrain from, and the Shareholders willrefrain from, selling any of the Registrable Shares for a period determined bythe Company but not to exceed 120 days (or such lesser period as the Companymay require its officers and directors or other holders of shares of CommonStock to so refrain) (each such period referred to as a “Holdback Period”) solong as the Company delivers written notice to the Shareholders of the Company’srequirement of a Holdback Period and the length of such Holdback Period priorto commencement of the Holdback Period.

 

**ARTICLE IV**

 

**Indemnification; Contribution**

 

**Section 4.1.****                                Indemnificationby the Company**.  The Company will,and hereby agrees to, indemnify and hold harmless, to the fullest extentpermitted by law, and, subject to Section 4.3 below, defend each of Fisherand Moloney and their respective agents and representatives (each, a “CompanyIndemnitee”), against any and all losses, claims, damages, liabilities andexpenses, joint or several, to which they or any of them may become subjectunder the Securities Act or any other statute or common law, including anyamount paid in settlement of any action or proceeding, commenced or threatened,and to reimburse them for any reasonable legal or other expenses incurred bythem in connection with investigating any claims and defending any actions(collectively, “Losses”), with respect to sales of Registrable Shares under theRegistration Statement, insofar as any Losses arise out of or are based upon (i) anyuntrue statement or alleged untrue statement of a material fact contained inthe Registration Statement or any pre- or post-effective amendment thereto orin any Blue Sky Filing, or the omission or alleged omission to state therein amaterial fact required to be stated therein or necessary to make the statementstherein not misleading or (ii) any untrue statement or alleged untruestatement of a material fact contained in the Prospectus or any amendment orsupplement thereto, or the omission or alleged omission to state therein amaterial fact necessary in order to make the statements therein, in the lightof the circumstances under which they were made, not misleading;

 

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or (iii) any violation of the Securities Act of 1933; provided,however, that the indemnification agreement contained herein shall not (i) applyto Losses arising out of, or based upon, any such untrue statement or allegeduntrue statement, or any such omission or alleged omission, if such statementor omission was made in reliance upon and in conformity with informationfurnished in writing to the Company by such Company Indemnitee from time totime specifically for use in the Registration Statement, the Prospectus or anysuch amendment or supplement thereto or any Blue Sky Filing or (ii) inureto the benefit of any Person, to the extent that any such Loss arises out ofsuch Person’s failure to send or give a copy of the Prospectus, as the same maybe then supplemented or amended, to the Person asserting an untrue statement oralleged untrue statement, or omission or alleged omission, at or prior to thewritten confirmation of the sale of the Registrable Shares to such Person ifsuch statement or omission was corrected in the Prospectus or any amendment orsupplement thereto prior to the written confirmation of the sale.  Such indemnity shall remain in full force andeffect regardless of any investigation made by or on behalf of such CompanyIndemnitee or any other Person and shall survive the transfer of such securitiesby such Company Indemnitee.

 

**Section 4.2.****                                Indemnificationby the Shareholders**.  TheShareholders will, and hereby agree to, indemnify and hold harmless and,subject to Section 4.3 below, defend (in the same manner and to the sameextent as set forth in Section 4.1 above), hold harmless and defend, theCompany and the Company’s officers, directors, employees, agents,representatives and each other Person, if any, who controls the Company withinthe meaning of the Securities Act, with respect to any such untrue statement oralleged untrue statement in, or any such omission or alleged omission from, theRegistration Statement, any Prospectus, or any amendment or supplement thereto,if such statement or omission was made in reliance upon and in conformity withinformation furnished in writing to the Company by the Shareholders from timeto time specifically for use in the Registration Statement, the Prospectus, andany such amendment or supplement thereto. Such indemnity shall remain in full force and effect, regardless of anyinvestigation made by or on behalf of the Company or any such director, officeror any other Person and shall survive the transfer of such securities by theShareholders.  The liability of anindemnifying party under this Section 4.2 shall be limited to the amountof the net proceeds received by such indemnifying party upon the resale of anyRegistrable Shares pursuant to the Registration Statement creating suchliability.

 

**Section 4.3.****                                Noticesof Claims**.  Promptly after receipt byan indemnified party of notice of the commencement of any action or proceedinginvolving a claim referred to in Sections 4.1 and 4.2 above, such indemnifiedparty will give, if a claim in respect thereof is to be made against anindemnifying party, written notice to the latter of the commencement of suchaction, provided that the failure of any indemnified party to give notice asprovided herein shall not relieve the indemnifying party of its obligationsunder this Article IV, except to the extent that the indemnifying party isactually prejudiced in any material respect by such failure to givenotice.  In case any such action isbrought against an indemnified party, the indemnifying party shall be entitledto participate in and, unless in such indemnified party’s reasonable judgment aconflict of interest between such indemnified and indemnifying parties mayexist in respect of such claim, to assume the defense thereof, jointly with anyother indemnifying party similarly

 

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notified to the extent that it may wish, with counsel reasonablysatisfactory to such indemnified party, and, after notice from the indemnifyingparty to such indemnified party of its election to assume the defense thereof,the indemnifying party shall not be liable to such indemnified party for anylegal or other expenses subsequently incurred by the latter in connection withthe defense thereof other than reasonable costs of reasonableinvestigation.  If the indemnifying partyadvises an indemnified party that it will contest a claim for indemnificationhereunder, or fails, within 30 days of receipt of any indemnification notice tonotify, in writing, such Person of its election to defend, settle orcompromise, at its sole cost and expense, any action, proceeding or claim (ordiscontinues its defense at any time after it commences such defense), then theindemnified party may, at its option, defend, settle or otherwise compromise orpay such action or claim in each case at the indemnifying party’s expense.  In any event, unless and until theindemnifying party elects in writing to assume and does so assume the defenseof any such claim, proceeding or action, the indemnified party’s reasonablecosts and expenses arising out of the defense, settlement or compromise of anysuch action, claim or proceeding shall be losses subject to indemnificationhereunder.  The indemnified party shallcooperate fully with the indemnifying party in connection with any negotiationor defense of any such action or claim by the indemnifying party and shallfurnish to the indemnifying party all information reasonably available to theindemnified party that relates to such action or claim.  The indemnifying party shall keep theindemnified party fully informed at all times as to the status of the defenseor any settlement negotiations with respect thereto.  If the indemnifying party elects to defendany such action or claim, then the indemnified party shall be entitled toparticipate in such defense with counsel of its choice at its sole cost andexpense, except that the indemnifying party shall be liable for such reasonablecosts and expenses if, in such indemnified party’s reasonable judgment, aconflict of interest between such indemnified and indemnifying parties mayexist as described above.  If the indemnifyingparty does not assume such defense, the indemnified party shall keep theindemnifying party informed at all times as to the status of the defense; provided,however, that the failure to keep the indemnifying party so informed shall notaffect the obligations of the indemnifying party hereunder.  No indemnifying party shall be liable for anysettlement of any action, claim or proceeding effected without its writtenconsent; provided, however, that the indemnifying party shall notunreasonably withhold, delay or condition its consent.  No indemnifying party shall, without thewritten consent of the indemnified party, consent to entry of any judgment orenter into any settlement that does not include as an unconditional termthereof the giving by the claimant or plaintiff to such indemnified party of ageneral written release from all liability with respect to such claim orlitigation.

 

**Section 4.4.****                                IndemnificationPayments**.  The indemnificationrequired by this Article IV shall be made by periodic payments of theamount thereof during the course of the investigation or defense as and whenbills are received or Losses are incurred, subject to the receipt of suchdocumentary support therefor as the indemnifying party may reasonably request.

 

**Section 4.5.****                                Contribution**.  If the indemnification provided for in this Article IVis unavailable to or insufficient to hold harmless a party otherwise entitledto be indemnified thereunder in respect to any Losses referred to therein, thenthe parties required to provide indemnification under this Article IVshall contribute to the amount paid or payable by such party

 

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as a result of Losses in such proportion as is appropriate to reflectthe relative fault of each such indemnifying party in connection with thestatements or omissions that resulted in such Losses. The relative fault ofeach indemnifying party shall be determined by reference to whether the untruestatement or alleged untrue statement of a material fact or the omission oralleged omission to state a material fact relates to information supplied bythe indemnifying party and the parties’ relative intent, knowledge, access toinformation and opportunity to correct or prevent such statement oromission.  The Company and theShareholders agree that it would not be just and equitable if contributionspursuant to this Section 4.5 were determined by pro rata allocation or byany other method of allocation that does not take account of the equitableconsiderations referred to above in this Section 4.5.  No person guilty of fraudulentmisrepresentation (within the meaning of Section 11(f) of theSecurities Act) shall be entitled to contribution from any person who is notguilty of such fraudulent misrepresentation.

 

**Section 4.6.****                                OtherRights and Liabilities**.  Theindemnity and contribution agreements contained herein shall be in addition to (i) anycause of action or similar right of the indemnified party against theindemnifying party or others and (ii) any liabilities the indemnifyingparty may be subject to pursuant to the law.

 

**ARTICLE V**

 

**Miscellaneous**

 

**Section 5.1.****                                Notices. **Any notices or other communicationsrequired or permitted hereunder shall be sufficiently given if in writing(including telecopy or similar teletransmission), addressed as follows:

 
| If to the  Company, to it at: | Cardinal Financial Corporation        |
|-------------------------------|---------------------------------------|
|                          | 8270 Greensboro Drive, Suite 500 |
|                          | McLean, Virginia 22102                |
|                          | Telecopier: (703) 584-3435            |
|                          | Attention: Bernard H. Clineburg       |
|                          |                                  |
| With a copy to:               |                                  | Williams, Mullen, Clark & Dobbins |
|                          |                                  | 1021 East Cary Street, 17th Floor |
|                          |                                  | Richmond, Virginia 23219 |
|                          |                                  | Telecopier: (804) 783-6507 |
|                          |                                  | Attention: Wayne A. Whitham, Jr., Esquire |
|                          |                                  |   |
| If to Fisher, to him  at:     |                                  | John W. Fisher |
|                          |                                  | 201 N. Union Street, #230 |
|                          |                                  | Alexandria, Virginia 22314 |
|                          |                                  |   |
| With a copy to:               |                                  |   |
|                          |                                  |   |
|                          |                                  |   |
|                          |                                  |   |

 

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| If to Fisher, to  him at: | James Bennett Moloney      |
|---------------------------|----------------------------|
|                      | 201 N. Union Street, #230  |
|                      | Alexandria, Virginia 22314 |
|                      |                       |
| With a copy to:           |                       |   |
|                      |                       |   |
|                      |                       |   |
|                      |                       |   |

 

Unless otherwise specified herein, such notices orother communications shall be deemed received (a) in the case of anynotice or communication sent other than by mail, on the date actually deliveredto such address (evidenced, in the case of delivery by overnight courier, byconfirmation of delivery from the overnight courier service making suchdelivery, and in the case of a telecopy, by receipt of a transmissionconfirmation form or the addressee’s confirmation of receipt), or (b) inthe case of any notice or communication sent by mail, three Business Days afterbeing sent, if sent by registered or certified mail, with first-class postageprepaid.  Each of the parties heretoshall be entitled to specify a different address by giving notice as aforesaidto each of the other parties hereto.

 

**Section 5.2.****                                Amendments,Waivers, Etc**.  This Agreement may notbe amended, changed, supplemented, waived or otherwise modified or terminatedexcept by an instrument in writing signed by the Company and the Shareholders.

 

**Section 5.3.****                                Successorsand Assigns**.  Except as otherwiseprovided herein, this Agreement shall be binding upon and shall inure to thebenefit of and be enforceable by the parties and their respective successorsand assigns, including without limitation in the case of any corporate partyhereto any corporate successor by merger or otherwise; provided that noparty may assign this Agreement without the other party’s prior writtenconsent.

 

**Section 5.4.****                                EntireAgreement**.  This Agreement embodiesthe entire agreement and understanding among the parties relating to thesubject matter hereof and supersedes all prior agreements and understandingsrelating to such subject matter.  Thereare no representations, warranties or covenants by the parties hereto relatingto such subject matter other than those expressly set forth in this Agreementand the Share Exchange Agreement.

 

**Section 5.5.****                                SpecificPerformance**.  The parties acknowledgethat money damages are not an adequate remedy for violations of this Agreementand that any party may, in its sole discretion, apply to a court of competentjurisdiction for specific performance or injunctive or such other relief assuch court may deem just and proper in order to enforce this Agreement or

 

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prevent any violation hereof and, to the extent permitted by applicablelaw, each party waives any objection to the imposition of such relief.

 

**Section 5.6.****                                RemediesCumulative**.  All rights, powers andremedies provided under this Agreement or otherwise available in respect hereofat law or in equity shall be cumulative and not alternative, and the exerciseor beginning of the exercise of any thereof by any party shall not preclude thesimultaneous or later exercise of any other such right, power or remedy by suchparty.

 

**Section 5.7.****                                NoWaiver**.  The failure of any partyhereto to exercise any right, power or remedy provided under this Agreement orotherwise available in respect hereof at law or in equity, or to insist uponcompliance by any other party hereto with its obligations hereunder, and anycustom or practice of the parties at variance with the terms hereof, shall notconstitute a waiver by such party of its right to exercise any such or otherright, power or remedy or to demand such compliance.

 

**Section 5.8.****                                NoThird Party Beneficiaries**.  Except asprovided in Article IV above, this Agreement is not intended to be for thebenefit of and shall not be enforceable by any Person who or which is not aparty hereto.

 

**Section 5.9.****                                Consentto Jurisdiction**.  Each party to thisAgreement, by its execution hereof, (i) hereby irrevocably submits, andagrees to cause each of its Affiliates to submit, to the jurisdiction of thefederal courts located in Virginia, and in the event that such federal courtsshall not have subject matter jurisdiction over the relevant proceeding, thenof the state courts located either in Virginia, for the purpose of any Action(as such term is defined in the Stock Purchase Agreement) arising out of orbased upon this Agreement or relating to the subject matter hereof or thetransactions contemplated hereby, (ii) hereby waives, and agrees to causeeach of its Affiliates to waive, to the extent not prohibited by applicablelaw, and agrees not to assert, and agrees not to allow any of its Affiliates toassert, by way of motion, as a defense or otherwise, in any such Action, anyclaim that it is not subject personally to the jurisdiction of the above-namedcourts, that its property is exempt or immune from attachment or execution,that any such proceeding brought in one of the above-named courts is improper,or that this Agreement or the subject matter hereof may not be enforced in orby such court and (iii) hereby agrees not to commence or to permit any ofits Affiliates to commence any Action arising out of or based upon thisAgreement or relating to the subject matter hereof other than before one of theabove-named courts nor to make any motion or take any other action seeking orintending to cause the transfer or removal of any such Action to any courtother than one of the above-named courts whether on the grounds of inconvenientforum or otherwise.  Each party herebyconsents to service of process in any such proceeding in any manner permittedby Virginia law, as the case may be, and agrees that service of process byregistered or certified mail, return receipt requested, at its addressspecified pursuant to Section 5.1 above is reasonably calculated to giveactual notice.  Notwithstanding anythingcontained in this Section 5.9 to the contrary with respect to the parties’forum selection, if an Action is filed against a party to this Agreement,including its Affiliates, by a person who or which is not a party to thisAgreement, an Affiliate of a party to

 

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this Agreement, or an assignee thereof (a “Third Party Action”), in aforum other than the federal district court or a state court located in Virginia,and such Third Party Action is based upon, arises from, or implicates rights,obligations or liabilities existing under this Agreement or acts or omissionspursuant to this Agreement, then the party to this Agreement, including itsAffiliates, joined as a defendant in such Third Party Action shall have theright to file cross-claims or third-party claims in the Third Party Actionagainst the other party to this Agreement, including its Affiliates, and evenif not a defendant therein, to intervene in such Third Party Action with orwithout also filing cross-claims or third-party claims against the other partyto this Agreement, including its Affiliates.

 

**Section 5.10.****                         GoverningLaw**.  This Agreement shall begoverned by and construed in accordance with the domestic substantive law ofthe Commonwealth of Virginia, without giving effect to any choice or conflictof law provision or rule that would cause the application of the law ofany other jurisdiction.

 

**Section 5.11.****                         Name,Captions**.  The name assigned to thisAgreement and the section captions used herein are for convenience ofreference only and shall not affect the interpretation or construction hereof.

 

**Section 5.12.****                         Counterparts**.  This Agreement may be executed in any numberof counterparts, each of which shall be deemed to be an original, but all ofwhich together shall constitute one instrument. Each counterpart may consist of a number of copies each signed by lessthan all, but together signed by all, the parties hereto.

 

**Section 5.13.****                         Expenses**.  Each of the parties hereto shall bear theirown expenses incurred in connection with this Agreement and the transactionscontemplated hereby, except that in the event of a dispute concerning the termsor enforcement of this Agreement, the prevailing party in any such disputeshall be entitled to reimbursement of reasonable legal fees and disbursementsfrom the other party or parties to such dispute.

 

**Section 5.14.  Severability**.  In the event that any provision of thisAgreement would, under applicable law, be invalid or unenforceable in anyrespect, such provision shall (to the extent permitted under applicable law) beconstrued by modifying or limiting it so as to be valid and enforceable to themaximum extent compatible with, and possible under, applicable law.  The provisions of this Agreement areseverable, and in the event that any provision hereof should be held invalid orunenforceable in any respect, it shall not invalidate, render unenforceable orotherwise affect any other provision hereof.

 

 

**[SIGNATURES ON NEXT PAGE]**

 

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**IN WITNESS WHEREOF**,the parties hereto, intending to be legally bound hereby, have caused thisRegistration Rights Agreement to be executed, as of the date first abovewritten by their respective officers thereunto duly authorized.

 
|   | **CARDINAL FINANCIAL CORPORATION** |
|--------|------------------------------------|
|   |                               |   |   |
|   |                               |   |   |
|   | By:                                |   |   |
|   |                               | Name: | Bernard H. Clineburg |
|   |                               | Title: | Chairman,  President and  Chief Executive Officer |
|   |                               |   |   |
|   |                               |   |   |
|   |                               |   |   |
|   |                               |   |
|   | JOHN W. FISHER                     |
|   |                               |   |   |
|   |                               |   |   |
|   |                               |   |   |
|   |                               |   |
|   | JAMES B. MOLONEY                   |
|        |                                    |  |  |  |

 

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**EXHIBIT I**

 

**EMPLOYMENTAGREEMENT**

 

THIS EMPLOYMENT AGREEMENT (the “Employment Agreement” or the “Agreement”)is made and entered into as of the        day of             ,2005 by and between **WILSON/BENNETT CAPITALMANAGEMENT, INC.**, a Virginia corporation, hereinafter called the “Corporation”,and **JOHN W. FISHER**, hereinafter called the “Employee”,and provides as follows:

 

**RECITALS**

 

**WHEREAS**, theCorporation desires to retain the services of Employee on the terms andconditions set forth herein and, for purpose of effecting the same, the Boardof Directors of the Corporation (the “Board of Directors”) has approved thisEmployment Agreement and authorized its execution and delivery on theCorporation’s behalf to the Employee; and

 

**WHEREAS**, theEmployee is presently the duly elected President and Chief Executive Officer ofthe Corporation and, as such, is a key Employee officer of the Corporationwhose continued dedication, availability, advice and counsel to the Corporationis deemed important to the Board of Directors, the Corporation and itsstockholders; and

 

**WHEREAS**, theservices of the Employee, his experience and knowledge of the affairs of theCorporation, and his reputation and contacts in the industry are valuable tothe Corporation; and

 

**WHEREAS**, theCorporation wishes to attract and retain such well-qualified Employees and itis in the best interests of the Corporation and of the Employee to secure thecontinued services of the Employee; and

 

**WHEREAS**, TheEmployee owns 90% of the Corporation’s issued and outstanding common stock; and

 

**WHEREAS**,contemporaneously with the execution of this Employment Agreement theCorporation is entering into an Agreement and Plan of Share Exchange, dated April     ,2005, (the “Share Exchange Agreement”) with Cardinal Financial Corporation, aVirginia corporation (“Cardinal”) pursuant to which the Corporation will becomea wholly-owned subsidiary of Cardinal (the “Share Exchange”); and

 

**WHEREAS**, if theShare Exchange is consummated, Employee, in his capacity as a shareholder of theCorporation, shall receive consideration with a value of $5,940,000.00; and

 

**WHEREAS,**theCorporation and Employee understand and acknowledge that the execution of thisAgreement is a material inducement for Cardinal to enter into the ShareExchange Agreement;

 

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**NOW, THEREFORE**,to assure the Corporation of the Employee’s continued dedication, theavailability of his advice and counsel to the Board of Directors, and to inducethe Employee to remain and continue in the employ of the Corporation and forother good and valuable consideration, the receipt and adequacy whereof eachparty hereby acknowledges, the Corporation and the Employee hereby agree asfollows:

 

**TERMS OF AGREEMENT**

 

Section 1.  Employment. (a)     Employee shall be employed as thePresident and Chief Executive Officer of the Corporation to perform suchservices for the Corporation and/or one or more Affiliates which are customaryand appropriate for a chief executive officer as may be assigned to Employee bythe Corporation from time to time upon the terms and conditions hereinafter setforth.

 

(b)                                 Referencesin this Agreement to services rendered for the Corporation and compensation andbenefits payable or provided by the Corporation shall include services renderedfor and compensation and benefits payable or provided by any Affiliate.  References in this Agreement to the “Corporation”also shall mean and refer to each Affiliate for which Employee performsservices.  References in this Agreementto “Affiliate” shall mean any business entity that, directly or indirectly,through one or more intermediaries, is controlled by the Corporation.

 

(c)                                  Employeeacknowledges that he is entering into this Agreement on his own free will andthat he has had the benefit of the advice of, and is relying solely upon,independent counsel of his own choice.

 

Section 2.  Term. The term of this Agreement shall commence on the date hereof andcontinue until April 30, 2008 (the “Employment Period”) unless sooner terminatedunder the terms of this Agreement. Beginning on April 30, 2008 and each April 30 thereafter, theEmployment Period and this Agreement and all its terms and provisions shall beautomatically extended for one additional year, unless prior notice ofnon-renewal is provided by the Corporation or Employee or employment under thisAgreement is otherwise terminated in accordance with the provisions of Section 9.

 

Section 3. Exclusive Service. Employee shall devote his best efforts and full time to renderingservices on behalf of the Corporation in furtherance of its best interests.Employee shall comply with all policies, standards and regulations of theCorporation now or hereafter promulgated, and shall perform his duties underthis Agreement to the best of his abilities and in accordance with standards ofconduct appropriate for the chief executive officer of a registered investmentadvisor.

 

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Section 4. Cash Compensation.  (a)     As compensation while employed hereunder,Employee shall receive a salary at the rate of $200,000 per year, payable twicemonthly.

 

(b)                                 For each calendar year, or part thereof,Employee shall be entitled to a bonus equal to 10% of the net income ofWilson/Bennett Capital Management, Inc. if such net income does not exceed$1,000,000.  If such net income exceeds$1,000,000, Employee’s bonus shall be $100,000, plus 20% of the amount by whichnet income exceeds $1,000,000.

 

For 2005 the bonus formulawill be annualized.  For example, if theEffective Date is July 1, 2005, the bonus will be 10% of the net income ofthe Corporation for the period from July 1, 2005 to December 31, 2005if such net income doe not exceed $500,000. If such net income exceeds $500,000, the bonus shall be $50,000, plus20% of the amount by which net income exceeds $500,000.

 

If this Agreement terminatesduring a year for any reason other than Cause or resignation without GoodReason, the bonus for the year will be annualized.  For example, if this Agreement terminates on July 1of a year, the bonus will be 10% of the net income of the Corporation for theperiod from January 1, through June 30 if such net income does notexceed $500,000.  If such net incomeexceeds $500,000, the bonus shall be $50,000, plus 20% of the amount by whichnet income exceeds $500,000.

 

In 2005 annualization shallbe based on the ratio of the number of days from the Effective Date to the endof the year to the number of days in the year. In the year Employee’s employment terminates, annualization shall bebased on the ratio of the number of days in the year before the Date ofTermination to the number of days in the year.

 

For purposes of this Section 4(b),net income shall be computed according to generally accepted accountingprinciples, consistently applied, but without deduction for income taxes,amortization of intangible assets or allocations of indirect overhead.  For purposes of the Agreement, “indirectoverhead” will include expenses paid or incurred by Cardinal or its affiliates that areallocated to the income statement of the Corporation by Cardinal and that didnot cause Cardinal to incur any incremental cost.  This includes, but is not limited to,  advertising costs, insurance costs, andofficers’ salaries that are allocated to the Corporation but which would havebeen incurred irrespective of whether Cardinal owned the Corporation.  However, if a Cardinal expense isgreater in amount due to its ownership of the Corporation, thensuch incremental cost may be deemed direct overhead for purposes of theAgreement.

 

(c)                                  TheCorporation shall withhold state and federal income taxes, social securitytaxes and such other payroll deductions as may from time to time be required bylaw or agreed upon in writing by Employee and the Corporation.  The Corporation shall also withhold and remitto the proper party any amounts agreed to in writing by the Corporation and theEmployee for participation in any corporate sponsored benefit plans in whichEmployee is a participant and for which a contribution is required.

 

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(d)                                 Exceptas otherwise expressly set forth hereunder, no compensation shall be paidpursuant to this Agreement in respect of any month or portion thereofsubsequent to any termination of Employee’s employment by the Corporation.

 

Section 5. Corporate Benefit Plans. Employee shall be entitled to participate in or become a participant inany employee benefit plan maintained by the Corporation for which he is or willbecome eligible on such terms as the Board of Directors may, in its discretion,establish, modify or otherwise change. On and after the effective date of the Share Exchange, Employee shall beentitled to participate in the Cardinal plans, as set forth in Section 5.1of the Share Exchange Agreement. Notwithstanding the above, Employee will not be eligible to participatein the Cardinal Bank Deferred Compensation Plan.  However on or after the Effective Date, hewill be eligible to participate in an executive deferred compensation plan thatis materially equivalent to the George Mason Mortgage, LLC Executive DeferredCompensation Plan.

 

Section 6. Expense Account.  TheCorporation shall reimburse Employee for reasonable and customary businessexpenses incurred in the conduct of the Corporation’s business.  Such expenses will include business meals,out-of-town lodging and travel expenses. In no event will there be reimbursement for items which are notreimbursable under Corporation policy. Employee agrees to timely submit records and receipts of reimbursableitems and agrees that the Corporation can adopt reasonable rules andpolicies regarding such reimbursement. The Corporation agrees to make prompt payment to the Employee followingreceipt and verification of such reports.

 

Section 7. Personal and Sick Leave. Employee shall be entitled to the same personal and sick leave as theBoard of Directors may from time to time designate for all full-time employeesof the Corporation.

 

Section 8. Vacations.  Employee shallbe entitled to four (4) weeks of vacation leave each year, which shall betaken at such time or times as may be approved by the Corporation and duringwhich Employee’s compensation hereunder shall continue to be paid.

 

Section 9.  Termination. (a)  Notwithstandingthe termination of Employee’s employment pursuant to any provision of thisAgreement, the parties shall be required to carry out any provisions of thisAgreement which contemplate performance by them subsequent to such termination,including the Corporation’s obligations under Section 10 and the Employee’sobligations under Section 11.  Inaddition, no termination shall affect any liability or other obligation ofeither party which shall have accrued prior to such termination, including, butnot limited to, any liability, loss or damage on account of breach. Notermination of employment shall terminate the obligation of the Corporation tomake payments of any vested benefits provided hereunder or the obligations ofthe Employee under Sections 11 and 12.

 

(b)                                 ThisAgreement shall terminate upon death of the Employee. The Corporation mayterminate Employee’s employment under this Agreement, after having establishedthe Employee’s disability by giving to the Employee written notice of its intentionto terminate his employment for disability, and his employment with theCorporation shall terminate effective on

 

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the 90th day after receipt of such notice (the “Disability EffectiveDate”) if within 90 days after such receipt the Employee shall fail to returnto the full-time performance of the essential functions of his position (and ifthe Employee’s disability has been established pursuant to the definition of “disability”set forth below).  For purposes of thisAgreement, “disability” means either (i) disability which after theexpiration of more than 13 consecutive weeks after its commencement isdetermined to be total and permanent by a physician selected and paid for bythe Corporation or its insurers, and acceptable to the Employee or his legalrepresentative, which consent shall not be unreasonably withheld, or (ii) disabilityas defined in the policy of disability insurance maintained by the Corporationfor the benefit of the Employee, whichever shall be more favorable to theEmployee.  Notwithstanding any otherprovision of this Agreement, the Corporation shall comply with all requirementsof the Americans with Disabilities Act, 42 U.S.C. § 12101 et.seq.

 

(c)                                  TheCorporation may terminate the Employee’s employment, in its sole discretion atany time during the Employment Period, with or without “Cause.”

 

(d)                                 TheEmployee’s employment may be terminated by the Employee, in the Employee’s solediscretion at any time during the Employment Period, with or without “GoodReason.”

 

(e)                                  Forpurposes of this Agreement,

 

(i)                                     “Cause”shall mean the Employee’s:

 

(A)                              continuedwillful failure, without Cure (as defined below), to perform substantially theEmployee’s duties with the Corporation (other than any such failure resultingfrom incapacity due to physical or mental illness);

 

(B)                                actsor conduct involving embezzlement, theft, larceny, fraud, or any other materialacts of dishonesty by the Employee in the performance of the Employee’s duties;

 

(C)                                convictionof, or entrance of a plea of guilty or nolo contendere to, a felony or anycrime by the Employee involving moral turpitude which crime of moral turpitudeis demonstrably injurious to the Corporation or client relationships;

 

(D)                               actsor conduct which result in the Employee becoming subject to an order of agovernmental agency or other regulatory body which prevents or materiallyrestricts the Employee in performing the Employee’s duties hereunder;

 

(E)                                 reportingto work under the influence of alcohol, narcotics or unlawful controlledsubstances, or any other material violation, without Cure (to the extent suchother material violation is capable of Cure), of any Corporation employmentpolicy or procedure or any other material violation of the Corporation’semployment policy or procedure which has the potential to subject theCorporation to legal liability;

 

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(F)                                 conductthat is demonstrably and materially injurious to the Corporation without Cure(to the extent such conduct is capable of Cure); or

 

(G)                                breachof any of the provisions of Section 11 of this Agreement.

 

(ii)                                  “Cure”shall mean, following the giving of notice of Cause or Good Reason, theEmployee or the Corporation, as the case may be, shall have cured the Cause orGood Reason within thirty (30) days of such notice having been given.

 

(iii)                               “GoodReason” shall mean a termination by Employee resulting from a material breachby the Corporation of a material obligation of the Corporation under thisAgreement without Cure.  A breachdescribed in this clause shall include, but not be limited to:

 

(A)                              adetrimental alteration or failure to comply with the terms of the Employee’semployment as they relate to the Employee’s position, responsibilities,reporting and duties, or the compensation and benefit arrangements applicableto the Employee;

 

(B)                                thefailure of the Corporation to obtain an agreement reasonably satisfactory tothe Employee from any successor of the Corporation to assume and agree toperform this Agreement, as contemplated in Section 13(b) hereof; or

 

(C)                                anytermination of the Employee’s employment which is not effected pursuant to theterms of this Agreement.

 

(f)                                    Anytermination by the Corporation with or without Cause, or by the Employee withor without Good Reason, shall be communicated by Notice of Termination to theother party hereto in accordance with this Section and Section 16 ofthis Agreement.  For purposes of thisAgreement, a “Notice of Termination” means a written notice which (i) indicatesthe specific termination provision in this Agreement relied upon, and (ii) tothe extent applicable, sets forth in reasonable detail the facts andcircumstances claimed to provide a basis for termination of the Employee’semployment under the provision so indicated. The failure by the Employee or the Corporation to set forth in theNotice of Termination any fact or circumstance which contributes to a showingof Good Reason or Cause shall not waive any right of the Employee or the Corporationhereunder or preclude the Employee or the Corporation from asserting such factor circumstance in enforcing the Employee’s or the Corporation’s rightshereunder.

 

(g)                                 “Dateof Termination” means if the Employee’s employment is terminated (i) by theCorporation for Cause or by the Employee for Good Reason, the date that is oneday after the last day of the cure period, if any, (ii) by the Corporationother than for Cause or Disability, or by the Employee without Good Reason, thedate that is 30 days after the date on

 

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which the Corporation or the Employee notifies the Employee or theCorporation, as applicable, of such termination, and (iii) by reason ofdeath or disability, the date of death of the Employee or the DisabilityEffective Date, as the case may be.

 

Section 10. Obligations of the Corporation upon Termination.

 

(a)                                  If,during the Employment Period, the Corporation shall terminate the Employee’semployment other than for Cause, death or disability or the Employee shallterminate employment for Good Reason, then the Corporation shall pay to theEmployee each month for 12 months one-twelfth of the Employee’s annual salary,and the amounts set forth below:

 

(i)                                     Tothe extent not theretofore paid, the Employee’s accrued salary through the Dateof Termination, any bonus for a prior year that remains unpaid; and

 

(ii)                                  TheEmployees’ bonus for the year in which his employment terminates calculatedaccording to Section 4(b).

 

(b)                                 If,during the Employment Period, the Corporation shall terminate the Employee’semployment for Cause or the Employee shall terminate his employment withoutGood Reason, then the Corporation shall have no further obligation to theEmployee; provided the Corporation shall pay to the Employee, to the extent nottheretofore paid, the Employee’s accrued salary through the Date of Terminationand any bonus for the prior year that remains unpaid; and, provided further, inorder that Section 11(c) shall apply for twelve (12) months followinga termination of employment for cause or a resignation by Employee without GoodReason, the Corporation may, at its option, pay to the Employee the sameamounts at the same times as set forth in Section 10(a).

 

(c)                                  If,during the Employment Period, the Employee is terminated due to disability, asdefined in Section 9(b) hereof, then the Corporation shall pay to theEmployee in a lump sum in cash within 30 days after the Date of Termination tothe extent not theretofore paid, the Employee’s accrued salary through the Dateof Termination and any bonus for a prior year that remains unpaid.

 

(d)                                 If,during the Employment Period, the Employee shall die, then the Corporationshall pay to the Employee’s personal representative in a lump sum in cash within30 days after the Date of Termination to the extent not theretofore paid, theEmployee’s accrued salary through the Date of Termination and any bonus for aprior year that remains unpaid.

 

(e)                                  Notwithstandinganything in this Agreement to the contrary, if Employee breaches Section 11,Employee will not thereafter be entitled to receive any further compensation orbenefits pursuant to this Section 10. All payments to Employee pursuant to Sections 10(a)(ii) and 10(b)(ii) shallbe solely in exchange for Employee’s covenants and agreements set forth in Section 11and shall not be deemed to be severance payments.

 

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(f)(1)  If Employeeresigns for any reason within three months after a Change of Control shall haveoccurred, or within three months of the date that Bernard H. Clineburg ceasesto serve as the Corporation’s chief executive officer, then on or beforeEmployee’s last day of employment with the Corporation, the Corporation shallpay to Employee as compensation for services rendered to the Corporation a cashamount (subject to any applicable payroll or other taxes required to bewithheld) equal to one hundred fifty percent (150%) of the sum of the paymentsreceived by him under Sections 4(a) and 4(b) in the 12 months thatprecede the Date of Termination.  Thecash amount required to be paid hereby shall be paid by the Corporation inequal monthly installments over the eighteen (18) months succeeding the date oftermination, payable on the first day of each such month.  Payment under this Section 8(f)(1) shallbe in lieu of any amount that is or might be due under Section 10(a).

 

(2)  For purposes ofthis Agreement, a Change of Control occurs if, after the date of thisAgreement, (i) any person, including a “group” as defined in Section 13(d)(3) ofthe Securities Exchange Act of 1934, becomes the owner or beneficial owner ofCorporation or Cardinal securities having 50% or more of the combined votingpower of the then outstanding Corporation or Cardinal securities that may becast for the election of the Corporation’s or Cardinal’s directors other thanas a result of an issuance of securities initiated by the Corporation’s orCardinal’s directors, or open market purchases approved by the Board ofDirectors, as long as the majority of the Board of Directors approving thepurchases is a majority at the time the purchases are made; or (ii) as thedirect or indirect result of, or in connection with, a tender or exchangeoffer, a share exchange or other business combination, a sale of assets, acontested election of directors, or any combination of these events, thepersons who were directors of the Corporation or Cardinal before such eventscease to constitute a majority of the Corporation’s or Cardinal’s Board, or anysuccessor’s board, within two years of the last of such transactions.  For purposes of this Agreement, a Change ofControl occurs on the date on which an event described in (i) or (ii) occurs.  If a Change of Control occurs on account of aseries of transactions or events, the Change of Control occurs on the date ofthe last of such transactions or events.

 

(3)  It is theintention of the parties that no payment be made or benefit provided toEmployee pursuant to this Agreement that would constitute an “excess parachutepayment” within the meaning of Section 280G of the Code and anyregulations thereunder, thereby resulting in a loss of an income tax deductionby the Corporation or the imposition of an excise tax on Employee under Section 4999of the Code.  If the independentaccountants serving as auditors of the Corporation on the date of a Change ofControl (or any other accounting firm designated by the Corporation) determinethat some or all of the payments or benefits scheduled under this Agreement, aswell as any other payments or benefits on a Change of Control, would benondeductible by the Company under Section 280G of the Code, then thepayments scheduled under this Agreement will be reduced to one dollar less thanthe maximum amount which may be paid without causing any such payment orbenefit to be nondeductible.  Thedetermination made as to the reduction of benefits or payments requiredhereunder by the independent accountants shall be binding on the parties.  Employee shall have the right to designatewithin a reasonable

 

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period, which payments or benefits will be reduced; provided, howeverthat if no direction is received from Employee, the Corporation shall implementthe reductions in its discretion.

 

Section 11. Confidentiality/Nondisclosure/Noncompetition/Nonsolicitation.  (a)(i)  The Employee acknowledges:

 

(A)                              TheCorporation’s business has been built over a period of eleven (11) yearsthrough the efforts of Employee; and

 

(B)                                Thatall or substantially all relationships with the Corporation’s customers arepersonal to Employee; and

 

(C)                                Thatit is his intent, if the Share Exchange is consummated, that the Corporation’sgoodwill, including the value of the long term relationships he has developedwith the Corporation’s customers, shall, indirectly through its ownership ofthe Corporation, become the property of Cardinal.

 

(ii)                                  Byentering into this Agreement, the Employee intends:

 

(A)                              Toinduce the Corporation and Cardinal to enter into the Share Exchange Agreement;and

 

(B)                                Toinduce Cardinal to consummate the Share Exchange.

 

(b)  Employee covenants and agrees that any andall information concerning the customers, businesses and services of theCorporation of which he has knowledge or access as a result of his associationwith the Corporation in any capacity shall be deemed confidential in nature andshall not, without the prior written consent of the Corporation, be directly orindirectly used, disseminated, disclosed or published by Employee to thirdparties other than in connection with the usual conduct of the business of theCorporation.  Such information shallexpressly include, but shall not be limited to, information concerning theCorporation’s asset management methods, other trade secrets, businessoperations, business records, customer lists or other customerinformation.  Upon termination ofemployment the Employee shall deliver to the Corporation all originals andcopies of documents, forms, records or other information, in whatever form itmay exist, concerning the Corporation or its business, customers, products orservices.  In construing this provisionit is agreed that it shall be interpreted broadly so as to provide the Corporationwith the maximum protection.  This Section 11(b) shallnot be applicable to any information which, through no misconduct or negligenceof Employee, is disclosed to the public by anyone other than Employee or thatEmployee, after notifying the Corporation, is compelled to disclose by legal process.

 

(c)  During the term ofthis Agreement and throughout any further period that he is an officer oremployee of the Corporation, and for a period of eighteen (18) months from andafter the date that Employee is (for any reason) no longer employed by theCorporation

 

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or for a period of eighteen (18) months from the date of entry by acourt of competent jurisdiction of a final judgment enforcing this covenant inthe event of a breach of Employee, whichever is later, Employee covenants andagrees that he will not, directly or indirectly, either for himself or as aprincipal, agent, employee, employer, stockholder, co-partner or in any otherindividual or representative capacity whatsoever provide Competitive Services(as defined in Section 11(e)) in any state in which Employee has beenlicensed or registered as an investment adviser representative or agent of theCorporation at any time within nine (9) months of the date Employee ceasesto be employed by the Corporation. Notwithstanding the foregoing, this Section 11(c) shall notapply during any period after a termination of Employee’s employment in whichor for which he is not receiving compensation under Section 10.

 

This Section 11(c) shallnot preclude Employee from merely becoming the holder of any publicly tradedstock, provided Employee does not acquire a stock interest in excess of 5%.

 

(d)                                 Whileemployed by the Corporation and for eighteen (18) months after the Employee’stermination of employment with the Corporation for any reason, the Employeewill not, directly or indirectly, on behalf of the Employee or any other personor entity, solicit or induce, or attempt to solicit or induce, any personemployed by the Corporation during the two-year period immediately prior to theEmployee’s termination, toterminate his or her relationship with the Corporation and/or to enter into anemployment or agency relationship with the Employee or with any other person orentity with whom the Employee is affiliated.

 

(e)                                  Whileemployed by the Corporation and for eighteen (18) months after the Employee’stermination of employment with the Corporation for any reason, the Employeewill not, except to the extent necessary to carry out his duties as an employeeof the Corporation, directly or indirectly provide Competitive Services (asdefined below) to any Customer (as defined below), directly or indirectly, onbehalf of the Employee or any other person or entity, or solicit or divert awayor attempt to solicit or divert away any Customer of the Corporation for thepurpose of selling or providing Competitive Services, provided the Corporationis then still engaged in the sale or provision of Competitive Services.

 

(f)(1)                      Forpurposes of this Agreement, the term “Customer” means any individual or entityto whom or to which the Corporation provided Competitive Services within twoyears of Employee’s Date of Termination (or, within one year of the Date ofTermination, the Corporation had identified as a prospect for the provision of Competitive Services, and withwhom or with which the Employee had, alone or in conjunction with others,material contact) during the year immediately prior to the Date of Termination.

 

(2)                                  Forpurposes of this Agreement, the Employee shall have had material contact with aperson or entity if (i) the Employee had direct business dealings with theperson or entity on behalf of the Corporation; (ii) the Employee wasresponsible for supervising or coordinating the business dealings between theperson or entity and the Corporation; (iii) the Employee was responsiblefor supervising or coordinating the identification of such person or

 

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entity as a prospective Customer of the Corporation; or (iv) theEmployee obtained trade secrets or confidential information about the person orentity as a direct result of the Employee’s business involvement with theperson or entity on behalf of the Corporation.

 

(3)                                  Forpurposes of this Agreement, “Competitive Services” shall mean acting as aninvestment adviser, investment adviser agent or representative, trust officeror employee or in any other capacity advising others, directly or indirectly,for compensation, as to the value of securities or as to the advisability ofinvesting in, purchasing or selling securities. Notwithstanding the foregoing, the word “securities” as used in this Section 11(f)(3) shallnot include equity securities that are not registered under the SecuritiesExchange Act of 1934, unless on or within nine (9) months prior to theDate of Termination, the Corporation has advised others, directly orindirectly, for compensation, as to the value of such securities or as to theadvisability of investing in, purchasing or selling such securities as part ofa portfolio of investments.

 

(g)                                 TheEmployee agrees that the covenants in this Section 11 are reasonablynecessary to protect the legitimate interests of the Corporation, are reasonable with respect to timeand territory and do not interfere with the interests of the public.  The Employee further agrees that thedescriptions of the covenants contained in this Section 11 aresufficiently accurate and definite to inform the Employee of the scope of thecovenants.  Finally, the Employee agreesthat the consideration set forth in the Share Exchange Agreement and in thisAgreement is full, fair and adequate to support the Employee’s obligationshereunder and the Corporation’s rights hereunder before and after the effectivedate of the Share Exchange.  The Employeeacknowledges that in the event the Employee’s employment with the Corporationis terminated for any reason, the Employee will be able to earn a livelihoodwithout violating such covenants.

 

(h)                                 Theparties have attempted to limit the Employee’s right to compete only to theextent necessary to protect the Corporation from unfair competition.  The parties recognize, however, thatreasonable people may differ in making such a determination.  Accordingly, the parties intend that thecovenants contained in this Section 11****and thesubparts thereof****to be completely severable andindependent, and any invalidity or unenforceability of any one or more suchcovenants will not render invalid or unenforceable any one or more of the othercovenants.  The parties further agreethat, if the scope or enforceability of a covenant contained in this Section 11or a subpart thereof is in any way disputed at any time, a court or other trierof fact may modify and reform such provision to substitute such other terms as arereasonable to protect the Corporation’s legitimate business interests.

 

(i)                                     Inthe event Employee shall desire to engage in any activity which Employeebelieves could breach the covenants in this Section 11, Employee may givenotice of such desired activity to the Corporation, and the Corporation shalladvise Employee in writing, within thirty (30) days following receipt of suchnotice, of its determination as to whether the proposed activity is permissiblehereunder, or whether the Corporation is willing to permit such activity evenif the Corporation believes such activity is not permissible hereunder.

 

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(j)                                     Theparties intend that the covenants and restrictions in this Section 11 beenforceable against Employee regardless of the reason that his employment bythe Corporation may terminate and that such covenants and restrictions shall beenforceable against Employee even if this Agreement expires after a notice ofnon-renewal given by Employee or the Corporation under Section 2.

 

Section 12. Injunctive Relief, Damages, Etc. The Employee agrees that, given the nature of the positions held byEmployee with the Corporation, each and every one of the covenants andrestrictions set forth in Section 11 above are reasonable in scope, lengthof time and geographic area and are necessary for the protection of thesignificant investment of the Corporation in developing, maintaining andexpanding its business. Accordingly, the parties hereto agree that in the eventof any breach by Employee of any of the provisions of Section 11 thatmonetary damages alone will not adequately compensate the Corporation for itslosses and, therefore, that it shall be entitled to any and all legal orequitable relief available to it, specifically including, but not limited to,injunctive relief, and the Employee shall be liable for all damages, includingactual and consequential damages, costs and expenses, including legal costs andactual attorneys’ fees, incurred by the Corporation as a result of takingaction to enforce, or recover for any breach of, Section 11, or incidentalto a declaratory judgment action filed by Employee in which the Company is theprevailing party.  The covenantscontained in Section 11 shall be construed and interpreted in any judicialproceeding to permit their enforcement to the maximum extent permitted by law.

 

Section 13. Binding Effect/Successors. (a)  This Employment Agreement shall be binding upon and inure tothe benefit of the Corporation and Employee and their respective heirs, legalrepresentatives, executors, administrators, successors and assigns. Neitherthis Agreement, nor any of the rights hereunder, shall be assignable by theEmployee or any beneficiary or beneficiaries designated by the Employee.

 

(b)  The Corporation will require any successor(whether direct or indirect, by purchase, Share Exchange, consolidation orotherwise) to all or substantially all of the business and/or assets of theCorporation, or either one of them, by agreement in form and substancesatisfactory to the Employee, to expressly assume and agree to perform thisAgreement in its entirety. Failure of the Corporation to obtain such agreementprior to the effectiveness of any such succession shall be a breach of this Agreementand shall entitle the Employee to the compensation described in Section 10(a).

 

Section 14. Governing Law.  ThisEmployment Agreement shall be subject to and construed in accordance with thelaws of Virginia.

 

Section 15. Invalid Provisions.  Theinvalidity or unenforceability of any provision of this Agreement shall notaffect the validity or enforceability of any other provision of this Agreement,which shall remain in full force and effect. Any provision in this Agreement which is prohibited or unenforceable inany jurisdiction shall, as to such jurisdiction, be valid and enforceable tothe fullest extent permitted by law without invalidating or affecting theremaining provisions hereof,

 

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and any such prohibition or unenforceability in any jurisdiction shallnot invalidate or render unenforceable such provision in any otherjurisdiction.

 

Section 16. Notices.  Any and allnotices, designations, consents, offers, acceptance or other communicationsprovided for herein shall be given in writing and shall be deemed properlydelivered if delivered in person or by registered or certified mail, returnreceipt requested, addressed in the case of the Corporation to its registeredoffice or in the case of Employee to his last known address.

 

Section 17. Litigation.  If litigationshall be brought to challenge, enforce or interpret any provision of thisAgreement, and such litigation ends with judgment against a party, that partyshall indemnify the other for one-half of its reasonable attorneys’ fees anddisbursements incurred in such litigation.

 

Section 18. Entire Agreement.

 

(a)                                  ThisEmployment Agreement constitutes the entire agreement among the parties withrespect to the subject matter hereof and supersedes any and all otheragreements, either oral or in writing, among the parties hereto with respect tothe subject matter hereof.

 

(b)                                 ThisEmployment Agreement may be executed in one or more counterparts, each of whichshall be considered an original copy of this Agreement, but all of whichtogether shall evidence only one agreement.

 

Section 19. Amendment and Waiver.  ThisEmployment Agreement may not be amended except in accordance with theShareholder Agreement by an instrument in writing signed by or on behalf ofeach of the parties hereto. No provision of this Agreement may be waived,except in accordance with the Shareholder Agreement.  Any such waiver shall be in writing, signedby the Employee and on behalf of the Corporation by such officer as may bespecifically designated by the Board of Directors.  No waiver by either party hereto at any timeof any breach by the other party hereto of, or compliance with, any conditionor provision of this Agreement to be performed by such other party shall bedeemed a waiver of any similar or dissimilar provision or conditions at thesame or at any prior or subsequent time

 

Section 20. Captions.  The captionsused in this Employment Agreement are intended for descriptive and referencepurposes only and are not intended to affect the meaning of any Section hereunder.

 

 

[execution page to follow]

 

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IN WITNESS WHEREOF, the Corporation has caused thisEmployment Agreement to be signed by its duly authorized officer and Employeehas hereunto set his hand and seal on the day and year first above written.

 
|    | WILSON/BENNETT CAPITAL MANAGEMENT, INC. |
|---------|-----------------------------------------|
|    |                                    |   |
|    |                                    |   |
|    | By:                                     |   |   |
|    | Title:                                  |   |   |
|    |                                    |   |   |
| ATTEST: |                                    |   |
|    |                                    |   |
|    |                                    |   |   |
|    | EMPLOYEE                                |   |
|    |                                    |   |
|    |                                    | (SEAL) |   |
|    | John W. Fisher                          |   |
|         |                                         |  |  |  |  |  |  |

 

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