Document:

Exhibit 10.1

 

EXECUTION

COUNTERPART

 

 

AGREEMENT AND PLAN
OF SHARE EXCHANGE

 

between

 

Wilson/Bennett
Capital Management, Inc.

 

and

 

Cardinal Financial
Corporation

 

 

April 29, 2005

 

 

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

  	
   

  

 

 

	
   

  	
  (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

  	
   

  

 

ii

 

	
  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

  	
   

  

 

iii

 

	
  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

  	
   

  

 

* As permitted by
Regulation S-K, the Company has not included this exhibit in the filing. The
Company agrees to furnish supplementally a copy of this exhibit to the
Commission upon request.

 

iv

 

AGREEMENT AND PLAN OF SHARE
EXCHANGE

 

THIS AGREEMENT AND PLAN OF SHARE EXCHANGE (the “Agreement”)
is made and entered into as of April 29, 2005 by and between
Wilson/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 and
the sole shareholder of Cardinal Bank; and

 

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

 

WHEREAS, the boards of directors of Cardinal and
Wilson/Bennett deem it advisable for Wilson/Bennett to become a wholly owned
subsidiary of Cardinal pursuant to this Agreement, the Plan of Share Exchange
attached 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 receive
cash and common stock of Cardinal in exchange therefor; and

 

WHEREAS, the respective Boards of Directors of
Wilson/Bennett and Cardinal have resolved that the transactions described
herein are in the best interests of the parties and their respective
shareholders and have authorized and approved the execution and delivery of
this Agreement.

 

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

 

ARTICLE 1

 

The Share Exchange and Related
Matters

 

1.1                                 The
Share Exchange.  Subject to
the terms and conditions of this Agreement, at the Effective Date as defined in
Section 1.2 hereof, each share of Wilson/Bennett Stock (as hereinafter
defined) will be exchanged for cash and Cardinal Common Stock (as hereinafter
defined) in accordance with Section 2.1 (the “Share Exchange”).  At the Effective Date, the Reorganization
shall have the effect provided in Section 13.1-721 of the Virginia Stock
Corporation Act.

 

1.2                                 The
Closing and Effective Date.  The closing of the transactions contemplated
by this Agreement and the Plan shall take place at the offices of Cardinal
Financial Corporation, 8270 Greensboro Drive, Suite 500, McLean, VA 22102,
Virginia or at such other place as may be

 

1

 

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

 

1.3                                 Definitions.  Any term defined
anywhere in this Agreement shall have the meaning ascribed to it for all
purposes of this Agreement (unless expressly noted to the contrary).  In addition:

 

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

 

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

 

(c)                                  the
term “Cardinal” shall mean Cardinal Financial Corporation, a Virginia
corporation, and any corporation with which it may merge prior to the Effective
Date.

 

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

 

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

 

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

 

2

 

prices shall be adjusted for any stock split or stock dividend that
occurs 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 reasonable
investigation.

 

(h)                                 “Material
Adverse Effect,” when used in reference to any party, shall mean or describe an
event, occurrence, or circumstance (including without limitation, any breach of
a representation or warranty contained herein by such party) which (1) has
an effect on the financial condition, results of operations, or business of
such party and its subsidiaries, that, if reduced to monetary damages, would be
in excess of $25,000 or (2) would materially impair any party’s ability to
timely perform its obligations under this Agreement or the consummation of any
of the transactions contemplated hereby; provided, that a Material
Adverse Effect with respect to a party shall not include events or conditions
generally affecting the securities industry or the banking industry or effects
resulting from general economic conditions (including changes in interest
rates), changes in accounting practices or changes to statutes, regulations or
regulatory policies, that do not have a materially more adverse effect on such
party than that experienced by similarly situated financial services companies
or investment advisers.

 

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

 

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

 

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

 

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

 

3

 

(m)                               The
capitalized 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 Common
Stock

 

2.1                                 Conversion of Shares.  (a)  Upon, and by reason of
the Share Exchange becoming effective pursuant to the issuance of a Certificate
of Share Exchange by the Virginia State Corporation Commission each share of
Wilson/Bennett Stock issued and outstanding on the Effective Date shall be
exchanged for a pro rata share of (y) shares of Cardinal Common Stock with a
Fair 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)                                 If
the 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) shall
be reduced by $1.00 for every dollar of the deficiency.  If the tangible net worth of Wilson/Bennett
on the Effective Date exceeds $42,000, the value of the exchange consideration
shall be increased by $1.00 for every dollar of such excess.  Cardinal shall have the right after the
Effective Date to audit the net worth of Wilson/Bennett as of the Effective
Date.  The exchange consideration shall
be retroactively adjusted if such audit discloses any error or inaccuracy in
the balance sheet of Wilson/Bennett on the Effective Date.  Any such adjustment shall be settled by a
cash payment to or by the Shareholders. 
The parties intend that this subsection operate such that the net
income of Wilson/Bennett, computed according to generally accepted accounting
principles, earned with respect to services performed by it before the
Effective Date shall be paid out to the shareholders, as long as such payments
do 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)                                  If
at the Effective Date, clients of Wilson/Bennett representing more than ten
percent (10%) of Assets Under Management shall have terminated or notified
Wilson/Bennett of an intent to terminate Investment Contracts, the exchange
consideration described in Section 2.1 shall be reduced.  The reduced exchange consideration shall be

 

4

 

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

 

(d)                                 If
the exchange consideration described in Section 2.1(a) is adjusted
pursuant to Section 2.1(b) or 2.1(c), the adjustment shall be to the cash
portion of the exchange consideration and not to the aggregate Fair Market
Value of the shares of Cardinal Common Stock to be issued.

 

(e)                                  Shares
of Wilson/Bennett Stock issued and outstanding shall, by virtue of the
Reorganization, continue to be issued and outstanding shares and shall be held
by Cardinal.

 

2.2                                 Manner
of Exchange.  As promptly as
practicable after the Effective Date, Cardinal shall cause its stock transfer
agent, acting as the exchange agent (“Exchange Agent”), to send to each former
shareholder of record of Wilson/Bennett immediately prior to the Effective Date
transmittal materials for use in exchanging such shareholder’s certificates of Wilson/Bennett
Stock for the consideration set forth in Section 2.1 above and Section 2.3
below.  Any fractional share checks which
a Wilson/Bennett shareholder shall be entitled to receive in exchange for such
shareholder’s shares of Wilson/Bennett Stock, and all dividends paid on any
shares of Cardinal Common Stock that such shareholder shall be entitled to
receive prior to the delivery to the Exchange Agent of such shareholder’s
certificates representing all of such shareholder’s shares of Wilson/Bennett
Stock will be delivered to such shareholder only upon delivery to the Exchange
Agent of the certificates representing all of such shares (or indemnity
satisfactory to Cardinal and the Exchange Agent, in their judgment, if any of
such certificates are lost, stolen or destroyed).  No interest will be paid on any such
fractional share checks or dividends to which the holder of such shares shall
be entitled to receive upon such delivery.

 

2.3                                 Fractional
Shares. 
Cardinal shall not issue fractional shares.  Cardinal will pay the value of such
fractional shares in cash on the basis of the Fair Market Value per share of
Cardinal Common Stock.

 

2.4                                 Dividends.  No dividend or
other distribution payable to the holders of record of Cardinal Common Stock at
or as of any time after the Effective Date shall be paid to the holder of any
certificate representing shares of Wilson/Bennett Stock issued and outstanding
at the Effective Date until such holder physically surrenders such certificate
for exchange as provided in Section 2.2 of this Agreement, promptly after
which time all such dividends or distributions shall be paid (without
interest).

 

5

 

ARTICLE 3

 

Representation and Warranties

 

3.1                                 Representations
and Warranties of Wilson/Bennett.  Each Shareholder and Wilson/Bennett
represents 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 is
duly qualified to do business and is in good standing in the states of the
United States and foreign jurisdictions where its ownership or leasing of
property or the conduct of its business requires it to be so qualified.
Wilson/Bennett has the corporate power and authority necessary to carry on its
business as it is now being conducted and to own all its material properties
and assets.  Wilson/Bennett has in effect
all federal, state, local, and foreign governmental authorizations necessary
for it to own or lease its properties and assets and to carry on its business
as it is now conducted.

 

(2)                                  All
of the shares of capital stock of Wilson/Bennett are fully paid and
nonassessable.

 

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

 

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

 

(c)                                  Capital
Structure.  The authorized capital stock of
Wilson/Bennett consists of ten shares of Class A Stock, no par value, and
ten shares of Class B Stock, no par value, all of

 

6

 

which, as of the date hereof, are issued, outstanding, fully paid and
nonassessable, not subject to shareholder preemptive rights and were not issued
in violation of any agreement to which Wilson/Bennett is a party or otherwise
bound, or of any registration or qualification provisions of any federal or
state securities laws. John W. Fisher is the record holder and beneficial owner
of ten shares of Class A Stock and eight shares of Class B
Stock.  James B. Moloney is the owner of
two shares of Class B Stock.  There
are no outstanding options, warrants or other rights to subscribe for or
purchase from Wilson/Bennett any capital stock of Wilson/Bennett or securities
convertible into or exchangeable for capital stock of Wilson/Bennett.

 

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

 

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

 

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

 

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

 

(iii)                               Statements
of 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, 2003
and 2002; and

 

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

 

Such financial statements and the notes thereto have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods indicated.  Each of such statements of financial
condition, together with the notes thereto, presents fairly as of its date the
financial condition and assets and liabilities of Wilson/Bennett.  Such statements of operations, statements of
stockholders’ equity and statements of cash flows, together with the notes
thereto present fairly the results of operations of Wilson/Bennett for the
periods indicated.

 

(f)                                    Absence
of Undisclosed Liabilities.  At March 31, 2005, Wilson/Bennett had no
obligation or liability (contingent or otherwise) of any nature which was not
reflected in the Wilson/Bennett Financial Statements, except for those which in
the aggregate are immaterial or have been Previously Disclosed.

 

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

 

7

 

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

 

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

 

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

 

(4)                                  Wilson/Bennett
has all permits, licenses, authorizations, orders and approvals of, and has
made all filings, applications and registrations with, all Regulatory
Authorities and Self-Regulatory Bodies that are required in order to permit it
to 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 or
cancellation of any of them is threatened or reasonably likely.  All such filings, applications and
registrations are current.  Wilson/Bennett
is in good standing with all relevant Regulatory Authorities and is a member in
good standing with all relevant Self-Regulatory Bodies.

 

(5)                                  Wilson/Bennett
has not received any notification or written communication (or, to its
knowledge, any other communication) from any Regulatory Authority or
Self-Regulatory Body (A) asserting that Wilson/Bennett is not in
compliance with any of the statutes, rules, regulations, or ordinances which
such Regulatory Authority or Self-Regulatory Body enforces, or has otherwise
engaged in any unlawful business practice, (B) threatening to revoke any
license, franchise, permit, governmental authorization, or other privilege, (C) requiring
Wilson/Bennett (including any of Wilson/Bennett’s directors or controlling
persons) to enter into a cease and desist order, agreement, or memorandum of
understanding (or requiring the board of directors thereof to adopt any
resolution or policy) or (D) restricting or disqualifying the activities
of Wilson/Bennett.

 

(6)                                  Wilson/Bennett
is not aware of any pending or threatened investigation, review or disciplinary
proceeding by any Regulatory Authority or Self-Regulatory Body against
Wilson/Bennett or any officer, director or employee thereof.

 

(7)                                  Neither
Wilson/Bennett nor any officer, director or employee thereof, is a party or
subject to any order, directive, decree, condition or similar arrangement or
action (other than exemptive orders) relating to the business of
Wilson/Bennett, with or by any federal, state, local or foreign regulatory
authority or industry trade group.

 

8

 

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

 

(h)                                 Investment Advisory Activities.  (1)  Disclosed in Exhibit D-1 is a
listing of (i) all of the clients to which Wilson/Bennett provides
investment management, investment advisory or sub-advisory services on the date
hereof, and (ii) each contract or agreement, and all amendments thereto,
in effect on the date hereof relating to Wilson/Bennett’s rendering of
investment advisory or management services (including without limitation all
sub-advisory services) to any client (together with any such contract or
agreement entered into after the date hereof, the “Investment Contracts”).  Each Investment Contract and any subsequent
renewal has been duly authorized, executed and delivered by Wilson/Bennett and,
to Wilson/Bennett’s best knowledge, each other party thereto and, to the extent
applicable, has been adopted in compliance with any statute, order, ordinance, rule or
regulation to which such Investment Contract is subject and is a valid and
binding agreement of Wilson/Bennett and each other party thereto, enforceable
in accordance with its terms (subject to bankruptcy, insolvency, moratorium,
fraudulent transfer and similar laws affecting creditors’ rights generally and
to general equity principles).  Each of
Wilson/Bennett and client party thereto is in compliance in all material
respects with the terms of each Investment Contract to which it is a party, and
is not currently in default under any of the terms of any such Investment Contract.  Each such Investment Contract is in full
force and effect.  Except as disclosed in
Exhibit D-4, none of the Investment Contracts, or any other arrangements
or understandings relating to Wilson/Bennett’s rendering of investment advisory
or management services (including without limitation all sub-advisory
services), contains any undertaking by a client to cap fees or to reimburse any
or all fees thereunder, and all such Investment Contracts or other arrangements
or understandings provide for the payment of fees.  Copies of each Investment Contract, including
a 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)                                  Except
as disclosed in Exhibit D-2, Wilson/Bennett has not received any notice
(written or otherwise) that any client has terminated or is planning to
terminate its relationship with Wilson/Bennett or will reduce materially its
use of the services of Wilson/Bennett.

 

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

 

9

 

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

 

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

 

(5)                                  No
basis exists upon which Wilson/Bennett would have any material liability to any
client.

 

(6)                                  Wilson/Bennett
has adopted a formal code of ethics and a written policy regarding insider
trading, a copy of each of which has been provided or supplied to
Cardinal.  Such code and policy comply
with Section 17(j) of the Investment Company Act of 1940 (as amended, the “Investment
Company Act”), and Rule 17j-1 thereunder, if applicable, and Section 204A
of the Investment Advisers Act of 1940 (as amended, the “Investment Advisers
Act”), respectively.  The policies of
Wilson/Bennett with respect to avoiding conflicts of interest are as set forth
in the most recent Form ADV thereof, as amended, a copy of which has been
delivered or made available to Cardinal, and Wilson/Bennett’s “soft-dollar”
policies and arrangements satisfy the requirements of Section 28(e) of
the Securities Exchange Act of 1934 (as amended, the “Exchange Act”) and all
other applicable laws and regulations. 
There have been no violations or allegations of violations of such
policies.

 

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

 

(8)                                  Wilson/Bennett
is not required to be registered as a broker-dealer under any state or federal
law.

 

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

 

10

 

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

 

(10)                            The
aggregate amount of Assets Under Management by Wilson/Bennett are accurately
set forth in Exhibit D-6 hereto, together with a brief summary of the fee
arrangements in effect with respect to each Investment Contract.

 

(i)                                     Reports.  Wilson/Bennett
has timely filed (and, for the past five (5) years each person associated
with Wilson/Bennett has timely filed) all reports, registrations, statements
and other filings, together with any amendments required to be made with
respect 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-Regulatory
Bodies”)(all such reports and statements being collectively referred to herein
as the “Company Reports”), including without limitation all reports, registrations,
statements and filings required under the Investment Company Act, the
Investment Advisers Act, or any applicable state securities.  To the knowledge of Wilson/Bennett and the
Shareholders, as of their respective dates, the Company Reports complied in all
material respects with the statutes, rules, regulations and orders enforced or
promulgated by the regulatory authority or Self-Regulatory Body with which they
were filed and did not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.

 

(j)                                     Regulatory
Approvals.  To the knowledge of Wilson/Bennett there is
no reason why the regulatory approvals referred to in Section 6.1(a) should
not be obtained without the imposition of any condition of the type referred to
in Section 6.1(a).

 

(k)                                  Labor
Relations.  Wilson/Bennett is not a party to or bound by
any collective bargaining agreement, contract or other agreement or
understanding with a labor union or labor organization, nor is it the subject
of a proceeding asserting that it has committed an unfair labor practice
(within the meaning of the National Labor Relations Act) or seeking to compel
it to bargain with any labor organization as to wages and conditions of
employment, nor is there any strike or other labor dispute involving it pending
or, to the best of its knowledge, threatened, nor is it aware of any activity
involving its employees seeking to certify a collective bargaining unit or
engaging in any other organization activity.

 

(l)                                     Tax
Matters.  Wilson/Bennett has filed all federal, state
and local tax returns and reports required to be filed, and has paid all taxes
shown by such returns to be due and payable. Except as Previously Disclosed, no
tax return or report of Wilson/Bennett is under examination by any taxing
authority or the subject of any administrative or judicial proceeding, and no
unpaid tax deficiency has been asserted against Wilson/Bennett by any taxing
authority.

 

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

 

11

 

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

 

Wilson/Bennett shall not be liable for any tax under
Code §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 qualified
subchapter S subsidiary of Wilson/Bennett has, in the past 10 years, (A) acquired
assets from another corporation in a transaction in which Wilson/Bennett’s tax
basis for the acquired assets was determined, in whole or in part, by reference
to the tax basis of the acquired assets (or any other property) in the hands of
the transferor or (B) acquired the stock of any corporation that is a
qualified subchapter S subsidiary.

 

(m)                               (1)   Property.  Except as Previously
Disclosed or reserved against in the Wilson/Bennett Balance Sheet or
Wilson/Bennett Financial Statements, Wilson/Bennett has good and marketable
title free and clear of all material liens, encumbrances, charges, defaults or
equities of whatever character to all of the material properties and assets,
tangible or intangible, reflected in the Wilson/Bennett Financial Statements as
being owned by Wilson/Bennett as of the dates thereof.  To the best knowledge of Wilson/Bennett, all
buildings, and all fixtures, equipment, and other property and assets which are
material to its business on a consolidated basis, held under leases or subleases
by Wilson/Bennett are held under valid instruments enforceable in accordance
with their respective terms (except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors’ rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding
may be brought).  The buildings,
structures, and appurtenances owned, leased, or occupied by Wilson/Bennett are
in good operating condition and in a state of good maintenance and repair, and
to the best knowledge of Wilson/Bennett (i) comply with applicable zoning
and other municipal laws and regulations, and (ii) there are no latent
defects therein.

 

(2)                                  The
Company has the right to use within the geographic territory in which it
conducts its business (the “Territory”), and after consummation of the
transactions 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 its
properties and to carry on its business as currently conducted.

 

(3)                                  The
Company owns or licenses all computer software developed or currently used by
it which is material to the conduct of its business and has the right to use
such 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 for
Cardinal’s review, as soon as practicable, true and complete copies of all
material pension, retirement, profit-sharing, deferred compensation, stock
option, bonus, vacation or other material incentive plans or

 

12

 

agreements, all material medical, dental or other health plans, all
life insurance plans and all other material employee benefit plans or fringe
benefit plans, including, without limitation, all “employee benefit plans” as
that term is defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”), currently adopted,
maintained, sponsored in whole or in part, or contributed to by Wilson/Bennett
for the benefit of employees, retirees or other beneficiaries eligible to
participate (collectively, the “Wilson/Bennett Benefit Plans”).  Any of the Wilson/Bennett Benefit Plans which
is 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 been
a multi-employer plan within the meaning of Section 3(37) of ERISA.

 

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

 

(3)                                  No
Wilson/Bennett ERISA Plan is a defined benefit pension plan.

 

(o)                                 Investment
Securities.  Except as Previously Disclosed,
none of the investment securities reflected in the Wilson/Bennett Financial
Statements is (i) subject to any restriction, contractual, statutory, or
otherwise, which would impair materially the ability of the holder of such
investment to dispose freely of any such investment at any time or (ii) of
a type or in an amount that Cardinal would be prohibited from holding under the
Bank 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 a
party to, or is bound or subject to, or receives benefits under, any material
contract, lease or agreement (i.e., a contract, lease or
agreement providing for annual payments in excess of $25,000).  Copies of such contracts or agreements have
been supplied or made available to Cardinal. Wilson/Bennett is not in default
under any such material contract, agreement, commitment, arrangement, lease,
insurance policy or other instrument to which it is a party, by which its
assets, business or operations may be bound or subject to, or under which it or
any of its assets, business or operations receives benefits, and there has not
occurred any event that, with the lapse of time or the giving of notice or
both, would constitute such a default by Wilson/Bennett.  Wilson/Bennett is not subject to or bound by
any contract containing covenants which limit the ability of Wilson/Bennett to
compete in any line of business or with any person or which involves any
restriction of geographical area in which, or method by which, Wilson/Bennett
may carry on its business (other than as may be required by law or any
applicable regulatory authority).  Except
as disclosed in Exhibit F, there are no contracts between any affiliate of
Wilson/Bennett, on the one hand, and Wilson/Bennett on the other hand.

 

13

 

(q)                                 Insurance.  Wilson/Bennett is
insured with reputable insurers against such risks and in such amounts as the
management of Wilson/Bennett reasonably has determined to be prudent in
accordance 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 conducted
by Wilson/Bennett (copies of which have been supplied to Cardinal).  Wilson/Bennett has not made any claim under
any insurance policy and is not aware of any event or condition that is reasonably
likely to give rise to any such claim. 
Wilson/Bennett is not in default with respect to any provision contained
in any such policy or binder and has not failed to give any notice or present
any claim under any such policy or binder in due and timely fashion.  Wilson/Bennett has not received notice of
cancellation or non-renewal of any such policy or binder.  Wilson/Bennett has no knowledge of any
inaccuracy in any application for such policies or binders, any failure to pay
premiums when due or any similar state of facts or the occurrence of any event
that is reasonably likely to form the basis for any material claim against it
not fully covered (except to the extent of any applicable deductible) by the
policies or binders referred to above. 
Wilson/Bennett has not received notice from any of its insurance
carriers that any insurance premiums will be increased materially in the future
or that any such insurance coverage will not be available in the future on
substantially the same terms as now in effect.

 

(r)                                    Absence
of Material Changes and Events.  Since December 31, 2004, there has not
been any material adverse change in the condition (financial or otherwise),
aggregate assets or liabilities, assets under management, cash flow, earnings
or business of Wilson/Bennett, and except for entering into this Agreement,
Wilson/Bennett has conducted its business only in the ordinary course
consistent with past practice.

 

(s)                                  Brokers
and Finders.  Neither Wilson/Bennett nor any of its
officers, directors or employees, has employed any broker, finder or financial
advisor or incurred any liability for any fees or commissions in connection
with the transactions contemplated herein.

 

(t)                                    Environmental
Matters.  (1)  There are no legal,
administrative, arbitral or other claims, causes of action or governmental
investigations of any nature, seeking to impose, or that could result in the
imposition, on Wilson/Bennett of any liability arising under any Environmental
Laws pending or, to the best knowledge of Wilson/Bennett, threatened against (A) Wilson/Bennett,
(B) any person or entity whose liability for any Environmental Claim
Wilson/Bennett has or may have retained or assumed either contractually or by
operation of law, or (C) any real or personal property which Wilson/Bennett
owns or leases, or has been or is judged to have managed, supervised or
participated in the management of, which liability might have a Material
Adverse Effect on the business, financial condition or results of operations of
Wilson/Bennett.  Wilson/Bennett is not
subject to any agreement, order, judgment, decree or memorandum by or with any
court, governmental authority, regulatory agency or third party imposing any
such liability.

 

(2)                                  To
the best knowledge of Wilson/Bennett, there are no past or present actions,
activities, circumstances, conditions, events or incidents, including, without
limitation, the release, emission, discharge or disposal of any Materials of
Environmental Concern, that could

 

14

 

reasonably form the basis of any Environmental Claim or other claim or
action or governmental investigation that could result in the imposition of any
liability arising under any Environmental Laws currently in effect or adopted
but not yet effective against Wilson/Bennett or against any person or entity
whose liability for any Environmental Claim Wilson/Bennett or any
Wilson/Bennett Subsidiary has or may have retained or assumed either
contractually or by operation of law.

 

(3)                                  For
the purpose of this Agreement, the following terms shall have the following
meanings:

 

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

 

(ii)                                  “Environmental
Claim” means any Communication from any governmental authority or third party
alleging potential liability (including, without limitation, potential
liability 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 the
environment, of any Material of Environmental Concern.

 

(iii)                               “Environmental
Laws” means all applicable federal, state and local laws and regulations,
including the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, that relate to pollution or protection of human health
or 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 threatened
releases of Materials of Environmental Concern, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Materials of Environmental Concern.

 

(iv)                              “Materials
of Environmental Concern” means pollutants, contaminants, wastes, toxic
substances, petroleum and petroleum products and any other materials regulated
under Environmental Laws.

 

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

 

(v)                                 Books and Records.  Wilson/Bennett has at all times during the
previous five (5) years maintained books and records which accurately
reflect all its material transactions and account information in reasonable
detail, and has at all times maintained accounting controls, policies and
procedures reasonably designed to provide that (A) such transactions are
executed in

 

15

 

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

 

3.2                                 Representations
and Warranties of Cardinal.   Cardinal represents and warrants to
Wilson/Bennett as follows:

 

(a)                                  Organization,
Standing and Power. Cardinal is a
corporation duly organized, validly existing and in good standing under the
laws of Virginia.  It has all requisite
corporate power and authority to carry on its business as now being conducted
and to own and operate its assets, properties and business, and Cardinal has
the corporate power and authority to execute and deliver this Agreement and
perform the respective terms of this Agreement and of the Plan.  Cardinal is duly registered as a bank holding
company under the Bank Holding Company Act.

 

(b)                                 Authority.  (1)   The execution and delivery of this Agreement
and the Plan and the consummation of the Share Exchange have been duly and
validly authorized by all necessary corporate action on the part of
Cardinal.  The Agreement represents the
legal, valid, and binding obligation of Cardinal, enforceable against Cardinal
in accordance with its terms (except in all such cases as enforceability may be
limited by applicable bankruptcy, insolvency, Share Exchange, moratorium or
similar laws affecting the enforcement of creditors’ rights generally and
except that the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court before which any
proceeding may be brought).

 

(2)                                  Neither
the execution and delivery of the Agreement, the consummation of the
transactions contemplated therein, nor the compliance by Cardinal with any of
the provisions thereof will (i) conflict with or result in a breach of any
provision of the Articles of Incorporation or Bylaws of Cardinal, (ii) except
as Previously Disclosed, constitute or result in the breach of any term,
condition or provision of, or constitute default under, or give rise to any
right of termination, cancellation or acceleration with respect to, or result
in the creation of any lien, charge or encumbrance upon, any property or assets
of the Cardinal Companies pursuant to (A) any note, bond, mortgage,
indenture, or (B) any material license, agreement, lease or other
instrument or obligation, to which any of the Cardinal Companies is a party or
by which any of them or any of their properties or assets may be bound, or (iii) subject
to the receipt of the requisite approvals referred to in Section 4.6,
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to any of the Cardinal Companies or any of their properties or
assets.

 

(c)                                  Capital
Structure.  The authorized capital stock of Cardinal
consists of:   10,000,000 shares of
preferred stock, par value $1.00 per share, none of which is outstanding and
50,000,000 shares of Cardinal Common Stock, of which 18,530,794 shares are
issued and outstanding, fully paid and nonassessable, not subject to
shareholder preemptive rights, and not

 

16

 

issued in violation of any agreement to which Cardinal is a party or
otherwise bound, or of any registration or qualification provisions of any
federal or state securities laws.  The
shares of Cardinal Common Stock to be issued upon consummation of the Share
Exchange will have been duly authorized and, when issued in accordance with the
terms of this Agreement, will be validly issued, fully paid and nonassessable
and subject to no preemptive rights.

 

(d)                                 Financial
Statements.  Cardinal has previously furnished to
Wilson/Bennett true and complete copies of its audited consolidated balance
sheets 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 been
prepared in conformity with generally accepted accounting principles applied on
a consistent basis during the periods presented, and present fairly the
financial position of Cardinal as of the respective dates thereof and the
results of its operations for the three year period then ended.

 

(e)                                  Regulatory
Approvals.  Cardinal knows of no reason why
the regulatory approvals referred to in Section 6.1(a) should not be
obtained without the imposition of any condition of the type referred to in Section 6.1(a).

 

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

 

(g)                                 Absence of Claims.  Cardinal has no knowledge of any
claims, liabilities or contingent liabilities that are not reflected in the
Cardinal Financial Statements or incurred after December 31, 2004 in the
ordinary course of business that would have a Material Adverse Effect on
Cardinal.

 

ARTICLE 4

 

Conduct Prior to the Effective
Date

 

4.1                                 Access
to Records; Current Information.  (a)   Prior to the Effective Date, Cardinal, on the
one hand, and Wilson/Bennett on the other, agree to give to the other party
reasonable access to all the premises and books and records (including tax
returns filed and those in preparation) of it and its subsidiaries and to cause
its officers to furnish the other with such financial and operating data and
other information with respect to the business and properties as the other
shall from time to time request for the purposes of verifying the warranties
and representations set forth herein; provided, however, that any such
investigation shall be conducted in such manner as not to interfere
unreasonably with the operation of the respective business of the other.

 

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

 

17

 

other of (1) any material change in its business or operations, (2) any
material complaints, investigations or hearings (or communications indicating
that the same may be contemplated) of any Regulatory Authority relating to it, (3) any
denial of any application filed by it with any Regulatory Authority with
respect to this Agreement, (4) the institution or the threat of material
litigation involving or relating to it, or (5) any event or condition that
might be reasonably expected to cause any of its representations or warranties
set forth herein not to be true and correct as of the Effective Date (and will
use its best efforts to prevent or promptly remedy the same) or prevent it from
fulfilling its obligations hereunder; and in each case shall keep the other
informed with respect thereto.

 

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

 

4.3.                              Forbearances of Wilson/Bennett.  From the date hereof until the Effective
Date, except as expressly contemplated by this Agreement, without the prior
written consent of Cardinal, Wilson/Bennett will not:

 

(a)                                  Ordinary Course. 
Conduct the business of Wilson/Bennett other than in the ordinary and
usual course or fail to use reasonable efforts to preserve intact its business
organization and assets and maintain its rights, franchises and existing
relations with clients, customers, suppliers, employees and business
associates, engage in any new activities or lines of business, or take any
action reasonably likely to have a Material Adverse Effect upon Wilson/Bennett’s
ability to perform any of its material obligations under this Agreement.  Wilson/Bennett shall not engage in any
business or activity that is impermissible for a financial holding company
under the Bank Holding Company Act or the rules and regulations of the
Board of Governors of the Federal Reserve System.  Upon request by Wilson/Bennett, Cardinal will
promptly advise Wilson/Bennett whether any particular business, activity or
investment is impermissible for a financial holding company.

 

(b)                                 Capital Stock. 
Issue, sell or otherwise permit to become outstanding, or authorize the
creation of, any additional shares of capital stock of Wilson/Bennett or any
rights to acquire capital stock of Wilson/Bennett, or enter into any agreement
with respect to the foregoing, or permit any additional shares of capital stock
of Wilson/Bennett to become subject

 

18

 

to new grants of employee options, other rights to acquire capital
stock 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 capital
stock.

 

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

 

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

 

(f)                                    Dispositions. 
Except for the sale of securities or other investments or assets in the
ordinary 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 in
the ordinary course of business consistent with past practice, acquire any
material 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 any
material contract or amend or modify in any material respect any of its
existing material contracts.

 

(j)                                     Claims.  Settle
any claim, action or proceeding, except for any claim, action or proceeding
involving solely money damages in an amount, individually and in the aggregate
for all such settlements, not more than $25,000 and which is not reasonably
likely 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) result
in any of its representations and warranties set forth in this Agreement being
or becoming untrue in any material respect at any time at or prior to the
Effective Date, (2) result in any of the conditions to the Share Exchange
set forth in Article 6 not

 

19

 

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

 

(l)                                     Indebtedness.  Incur
any indebtedness for borrowed money or settle, modify or forgive any
indebtedness for borrowed money owed to Wilson/Bennett.

 

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

 

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

 

4.4                                 Forbearances of Cardinal.  From the date hereof until the Effective
Date, except as expressly contemplated by this Agreement, without the prior
written consent of Wilson/Bennett, which consent shall not be unreasonably
withheld, Cardinal will not knowingly take any action that is intended or is
reasonably likely to (1) result in any of its representations and
warranties set forth in this Agreement being or becoming untrue in any material
respect at any time at or prior to the Effective Date, provided that Cardinal
may proceed with and consummate its pending public offering of Cardinal Common
Stock, (2) result in any of the conditions to the Share Exchange set forth
in Article 6 not being materially satisfied or (3) result in a
material violation of any provision of this Agreement except, in each case, as
may be required by applicable law or regulation.

 

4.5                                 No
Solicitation.  Unless and until this Agreement
shall have been terminated pursuant to its terms, neither Wilson/Bennett nor
any of its officers, directors, representatives or agents shall, directly or
indirectly, (i) encourage, solicit or initiate discussions or negotiations
with any person other than Cardinal concerning any Share Exchange, share
exchange, sale of substantial assets, tender offer, sale of shares of capital
stock or similar transaction involving Wilson/Bennett, (ii) enter into any
agreement with any third party providing for a business combination
transaction, equity investment or sale of a significant amount of assets, or (iii) furnish
any information to any other person relating to or in support of such
transaction.

 

4.6.                              Regulatory Applications and Approvals.  Each of the parties hereto, at its own
expense, shall use its reasonable best efforts (A) promptly to prepare and
submit any applications that may be required to the appropriate Regulatory
Authorities for approval of the Share Exchange, and (B) promptly to make
all other appropriate filings to secure all other approvals, consents and
rulings which are necessary for the consummation of the Share Exchange.  Each of Wilson/Bennett and Cardinal agrees to
cooperate with the other and, subject to the terms and conditions set forth in
this Agreement, use its reasonable best efforts to prepare and file all
necessary permits, consents, orders, approvals and authorizations of, or any
exemption by, all third parties and Regulatory Authorities necessary or
advisable to consummate the transactions contemplated by this Agreement.  Each of Wilson/Bennett and Cardinal shall
have the right to review in advance, and to the extent practicable each will
consult with the other, in each case subject to applicable laws relating to the
exchange of information, with respect to all written

 

20

 

information submitted to any third party or any regulatory authorities
in connection with the transactions contemplated by this Agreement.  In exercising the foregoing right, each of
the parties hereto agrees to act reasonably and as promptly as
practicable.  Each party hereto agrees
that it will consult with the other party hereto with respect to the obtaining
of all material permits, consents, approvals and authorizations of all third
parties and regulatory authorities necessary or advisable to consummate the
transactions contemplated by this Agreement and each party will keep the other
party apprised of the status of material matters relating to completion of the
transactions 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 in
writing of the transactions contemplated by this Agreement.  Such notice shall be prepared by
Wilson/Bennett and approved by Cardinal before it is sent.  With such notice, Wilson/Bennett shall, in
compliance with the Investment Advisers Act, request Consent of each such
client to the Share Exchange and use its reasonable best efforts to obtain such
Consent.  In the case of Investment
Contracts which prohibit assignment or state by their terms that they terminate
upon assignment, Wilson/Bennett shall use its reasonable best efforts to enter
into new Investment Contracts or amend such Investment Contracts to delete such
prohibition or provide that they shall not terminate, in each case effective
upon the Effective Date.  Cardinal shall
have 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 Consent
to the Share Exchange and again request that the client give a Consent to the
Share Exchange.

 

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

 

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

 

4.8                                 Share
Exchange Consummation.  Subject to the terms and
conditions of this Agreement, each party shall use its best efforts in good
faith to take, or cause to be taken, all actions, and to do or cause to be done
all things necessary, proper or desirable, or advisable under applicable laws,
as promptly as practicable so as to permit consummation of the Share Exchange
at the earliest possible date, consistent with Section 1.2 herein, and to
otherwise enable consummation of the transactions contemplated hereby and shall
cooperate fully with the other party hereto to that

 

21

 

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

 

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

 

4.10                           Modification of Transaction/Taxes.
(a) Structure. At the request
of Cardinal, Wilson/Bennett agrees to take such actions as may be reasonably
necessary to modify the structure of, or to substitute parties to (as long as
such substitute is Cardinal or a wholly-owned subsidiary of Cardinal) the
transactions contemplated hereby, provided that such modifications do not
change the Share Exchange Consideration or abrogate the covenants and other
agreements contained in this Agreement.

 

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

 

(c)                                  Tax
Periods Ending On or Before Effective Date.  Each shareholder shall, jointly and
severally, indemnify Wilson/Bennett and/or Cardinal as applicable and hold them
harmless from and against all and any taxes (or the non-payment thereof) of
Wilson/Bennett for all taxable periods ending on or before the Effective Date.

 

(d)                                  Shareholders’
Tax.  Shareholders shall include
any income gain, loss, deduction, or other tax item resulting from the §338(h)(10) election
on their tax returns to the extent required by applicable law.  Shareholders shall also pay any tax imposed
on Wilson/Bennett attributable to the making of the §338(h)(10) Election,
including (i) any tax imposed under Code §1374, (ii) any tax imposed
under Treasury Regulation §1.338(h)(10-1(e)(5, or (iii) any state, local
or 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 shall
have entered an agreement in the form attached as Exhibit H under which
the Shareholder shall have certain rights to require Cardinal to Register
shares of the Cardinal Common Stock issued to him in the Share Exchange.

 

22

 

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

 

ARTICLE 5

 

Additional Agreements

 

5.1                                 Benefit
Plans.  Upon
consummation of the Share Exchange, as soon as administratively practicable and
subject to Cardinal’s best efforts, employees of Wilson/Bennett shall be
entitled to participate in Cardinal pension, benefit, health and similar plans
on the same terms and conditions as employees of Cardinal and its subsidiaries,
without waiting periods and giving effect to years of service with
Wilson/Bennett as if such service were with Cardinal; provided, however, that
no Wilson/Bennett employee shall receive credit for service with Wilson/Bennett
for benefit accrual purposes under any Cardinal defined benefit pension
plan.  Cardinal also shall cause
Wilson/Bennett to honor in accordance with their terms as in effect on the date
hereof (or as amended after the date hereof with the prior written consent of
Cardinal), all employment, severance, consulting and other compensation
contracts and agreements Previously Disclosed and executed in writing by
Wilson/Bennett on the one hand and any individual current or former director, officer
or employee thereof on the other hand, copies of which have previously been
delivered by Wilson/Bennett to Cardinal.

 

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

 

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

 

Cardinal will not obstruct any lawful sale of the shares.

 

23

 

5.3                                 Indemnification.

 

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

 

(b)                                 Obligations
of Shareholders.  Subject to Section 5.3(f),
the Shareholders hereby agree, jointly and severally, to indemnify, defend and
hold harmless Cardinal and its employees, officers, partners and other
affiliates 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 the
representations or warranties of the Shareholders and Wilson/Bennett made in or
pursuant to this Agreement or in any other agreement, certificate or document
executed in connection herewith or (b) any breach or nonperformance of any
of the covenants or other agreements made by Wilson/Bennett in or pursuant to
this Agreement.

 

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

 

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

 

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

 

24

 

Party’s own expense and by such Indemnifying Party’s own counsel (which
counsel shall be reasonably satisfactory to the Indemnified Party), any Third
Party Claim.  If the Indemnifying Party
elects to compromise or defend such Third Party Claim, it shall, within 30 days
after receiving notice of the Third Party Claim (10 days if the Indemnifying
Party states in such notice that prompt action is required), notify the
Indemnified Party of its intent to do so, and the Indemnified Party shall
cooperate, at the expense of the Indemnifying Party, in the compromise of, or
defense against, such Third Party Claim. 
If the Indemnifying Party elects not to compromise or defend against the
third Party Claim, or fails to notify the Indemnified Party of its election to
do so as herein provided, or otherwise abandons the defense of such Third Party
Claim, (A) the Indemnified Party may pay (without prejudice of any of its
rights as against the Indemnifying Party), compromise or defend such Third
Party Claim (until such defense is assumed by the Indemnifying Party) and (B) the
costs and expenses of the Indemnified Party incurred in connection therewith
shall be indemnifiable by the Indemnifying Party pursuant to the terms of this
Agreement.  Notwithstanding anything to
the contrary contained herein, in connection with any Third Party Claim in
which the Indemnified Party shall reasonably conclude, based upon the written
advice of its counsel, that (x) there is a conflict of interest between the
Indemnifying Party and the Indemnified Party in the conduct of the defense of
such Third Party Claim or (y) there are specific defenses available to the
Indemnified Party which are different from or additional to those available to
the Indemnifying Party and which could be materially adverse to the
Indemnifying Party, then the Indemnified Party shall have the right to assume
and direct the defense of such Third Party Claim.  In such an event, the Indemnifying Party
shall pay the reasonable fees and disbursements of counsel of the Indemnifying
Party and one counsel to all the Indemnified Parties.  Notwithstanding the foregoing, neither the
Indemnifying Party nor the Indemnified Party may settle or compromise any claim
over the objection of the other, provided, however, that consent to settlement
or compromise shall not be unreasonably withheld by the Indemnified Party and
provided further, that if the sole settlement relief payable to a Third Party
in respect of such Third Party Claim is monetary damages that are paid in full
by the Indemnifying Party, the Indemnifying Party may settle such claim without
the consent of the Indemnified Party.  In
any event, except as otherwise provided herein, the Indemnified Party and the
Indemnifying Party may each participate, at its own expense, in the defense of
such Third Party Claim.  If the
Indemnifying Party chooses to defend any claim, the Indemnified Party shall
make available to the Indemnifying Party any personnel or any books, records or
other documents within its control that are reasonably necessary or appropriate
for such defense, subject to the receipt of appropriate confidentiality
agreements.

 

(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 shall
not be deemed to apply to, or otherwise affect or limit, an Indemnified Party’s
rights under this Agreement with respect to any claim other than a Third Party
Claim.

 

(iv)                              Notice
of Non-Third Party Claims. Any Indemnified Party seeking indemnification
for any Loss or potential Loss arising from a claim asserted by any party to
this Agreement against the Indemnifying Party (a “Non-Third Party Claim”) shall
give written notice to the Indemnifying Party specifying in detail the source
of the Loss or potential Loss under

 

25

 

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

 

(e)                                  Survival
of Indemnity.  Notwithstanding anything
to the contrary in this Article 5, no Indemnified Party shall have any
right to indemnification with respect to any matter as to which formal notice
satisfying the requirements of Section 5.3(d)(i) or Section 5.3(d)(iv) shall
not have been provided by the Indemnified Party to the Indemnifying Party prior
to the expiration of the survival period set forth in Section 5.3(a).  Any matter as to which a claim has been
asserted by formal notice pursuant to Section 5.3(d) and within the
time limitation applicable by reason of the immediately preceding sentence that
is pending or unresolved at the end of any applicable limitation period under
this Section 5.3 or applicable law shall continue to be covered by this Section 5.3
notwithstanding any applicable statue of limitations (which the parties hereby
waive) until such matter is finally terminated or otherwise resolved by the
parties under this Agreement or by a court of competent jurisdiction and any
amounts payable hereunder are finally determined and paid.

 

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

 

ARTICLE 6

 

Conditions to the Share Exchange

 

6.1                                 Conditions
to Each Party’s Obligations to Effect
the Share Exchange.  The
respective obligations of each of Cardinal and Wilson/Bennett to effect the Share
Exchange and the other transactions contemplated by this Agreement shall be
subject to the fulfillment or waiver at or prior to the Effective Date of the
following conditions:

 

26

 

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

 

(b)                                 Opinions
of Counsel.  Wilson/Bennett shall have
delivered to Cardinal and Cardinal shall have delivered to Wilson/Bennett
opinions of counsel, dated as of the Effective Date, as to such matters as they
may each reasonably request with respect to the transactions contemplated by
this Agreement and in a form reasonably acceptable to each of them.

 

(c)                                  Legal
Proceedings.  Neither Cardinal nor
Wilson/Bennett shall be subject to any order, decree or injunction of a court
or agency of competent jurisdiction which enjoins or prohibits the consummation
of the Share Exchange.

 

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

 

6.2                                 Conditions
to Obligations of Cardinal.  The obligations of Cardinal to
effect the Share Exchange shall be subject to the fulfillment or waiver at or
prior to the Effective Date of the following additional conditions:

 

(a)                                  Representations
and Warranties.  Each of the representations and
warranties contained herein of the Shareholders and Wilson/Bennett shall be
true and correct as of the date of this Agreement and upon the Effective Date
with the same effect as though all such representations and warranties had been
made on the Effective Date, except (i) for any such representations and
warranties made as of a specified date, which shall be true and correct as of
such date, (ii) as expressly contemplated by this Agreement, or (iii) for
representations and warranties the inaccuracies of which relate to matters
that, individually or in the aggregate, do not materially adversely affect the Share
Exchange and the other transactions contemplated by this Agreement, and
Cardinal shall have received a certificate or certificates signed by the Chief
Executive Officer and Chief Financial Officer of Wilson/Bennett dated the
Effective Date, to such effect.

 

(b)                                 Performance
of Obligations.  Wilson/Bennett shall have
performed in all material respects all obligations required to be performed by
it under this Agreement prior to the Effective Date, and Cardinal shall have
received a certificate signed by the Chief Executive Officer of Wilson/Bennett
to that effect.

 

(c)                                  Client Consents.  Clients of Wilson/Bennett representing at
least seventy-five percent (75%) of Assets Under Management shall have Consented
to the Share Exchange.

 

27

 

(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 renewable
annually for at least five years. 
Cardinal shall be the sole beneficiary under such policy and the annual
cost of such policy shall not exceed $10,000.

 

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

 

6.3                                 Conditions
to Obligations of Wilson/Bennett.  The
obligations of Wilson/Bennett to effect the Share Exchange shall be subject to
the fulfillment or waiver at or prior to the Effective Date of the following
additional conditions:

 

(a)                                  Representations
and Warranties.  Each of the
representations and warranties contained herein of Cardinal shall be true and
correct as of the date of this Agreement and upon the Effective Date with the
same effect as though all such representations and warranties had been made on
the Effective date, except (i) for any such representations and warranties
made as of a specified date, which shall be true and correct as of such date, (ii) as
expressly contemplated by this Agreement, or (iii) for representations and
warranties the inaccuracies of which relate to matters that, individually or in
the aggregate, do not materially adversely affect the Share Exchange and the
other transactions contemplated by this Agreement, and Wilson/Bennett shall
have received a certificate or certificates signed by the Chief Executive
Officer and Chief Financial Officer of Cardinal dated the Effective Date, to
such effect.

 

(b)                                 Performance
of Obligations.  Cardinal
shall have performed in all material respects all obligations required to be
performed by it under this Agreement prior to the Effective Date, and
Wilson/Bennett shall have received a certificate signed by Chief Executive
Officer of Cardinal to that effect.

 

ARTICLE 7

 

Termination

 

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

 

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

 

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

 

28

 

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

 

(c)                                  At
any 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 to
consummate the transactions contemplated hereby cannot be satisfied or
fulfilled prior to the Share Exchange Closing, and the party giving the notice
is not in breach of any of its representations, warranties, covenants or
undertakings herein.

 

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

 

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

 

7.2                                 Effect
of Termination.  In the event
of 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) the
last sentence of Section 4.2 and all of Section 7.4 shall survive any
such termination and (ii) a termination pursuant to Section 7.1(b) shall
not relieve or release the breaching party from any liability for an uncured
breach of the covenant, agreement, understanding, representation or warranty
giving rise to such termination.

 

7.3                                 Survival of Representations, Warranties
and Covenants.  All
representations, warranties and covenants in this Agreement shall survive the
Effective Date.

 

7.4                                 Expenses.  Each of the parties shall bear and pay all
costs and expenses incurred by it or on its behalf in connection with the
transactions contemplated herein, including fees and expenses of its own
consultants, investment bankers, accountants and counsel.

 

ARTICLE 8

 

General Provisions

 

8.1                                 Entire
Agreement.  This Agreement
contains the entire agreement among Cardinal, Surviving Corporation and
Wilson/Bennett with respect to the Share Exchange and the related transactions
and supersedes all prior arrangements or understandings with respect thereto.

 

8.2                                 Waiver
and Amendment.  Any term or
provision of this Agreement may be waived in writing at any time by the party
which is entitled to the benefits thereof, and this

 

29

 

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

 

8.3                                 Descriptive
Headings.  Descriptive
headings are for convenience only and shall not control or affect the meaning
and construction of any provisions of this Agreement.

 

8.4                                 Governing
Law.  Except as otherwise
required or indicated herein, this Agreement shall be construed and enforced
according to the laws of the Commonwealth of Virginia.

 

8.5                                 Notices.  All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
personally or sent by registered or certified mail, postage prepaid, addressed
as 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

 

30

 

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 number
of counterparts, each of which shall be an original, but such counterparts
together shall constitute one and the same agreement.

 

IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed in counterparts by their duly authorized officers
and their corporate seals to be affixed hereto, all as of the dates first
written 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

 

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

 

	
   

  	
  /s/

  	
   

  
	
   

  	
  John W. Fisher

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/

  	
   

  
	
   

  	
  James B. Moloney

  	
   

  

 

32

 

EXHIBIT A

 

PLAN OF SHARE EXCHANGE

OF

WILSON/BENNETT CAPITAL
MANAGEMENT, 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 13.1-717
of the Virginia Stock Corporation Act.

 

The term “Fair Market Value”, with respect to shares
of Cardinal Common Stock, shall mean the average closing sale price on the
Nasdaq National Market for sales of Cardinal Common Stock for the twenty (20)
days on which Cardinal Common Stock trades immediately preceding the fifth day
before the Share Exchange Closing, adjusted, if necessary, for any stock split
or stock dividend, during such twenty (20) day period; provided, however, that
if such average is less than $9.00, Fair Market Value shall mean $9.00 and if
such average is greater than $11.00, Fair Market Value shall mean $11.00.  The preceding floor and ceiling prices shall
be 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 Share
Exchange, dated as of April     , 2005 between
Wilson/Bennett and Cardinal, at the Effective Date, Wilson/Bennett shall become
a wholly-owned subsidiary of Cardinal through the exchange of each outstanding
share of stock of Wilson/Bennett for cash and shares of the common stock of
Cardinal in accordance with Section 2.1 of this Plan of Share Exchange and
pursuant to Section 13.1-717 of the Virginia Stock Corporation Act (the “Share
Exchange”).  At the Effective Date, the
Share Exchange shall have the effect as provided in Section 13.1-721 of
the Virginia Stock Corporation Act.

 

1.2                                 Articles of Incorporation and Bylaws.  The Articles of Incorporation and Bylaws of
Cardinal in effect immediately prior to the consummation of the Share Exchange
shall remain in effect following the Effective Date until otherwise amended or
repealed.

 

A-1

 

ARTICLE 2

 

2.1                                 Conversion of Shares.  (a) 
Upon, and by reason of the Share Exchange becoming effective pursuant to the
issuance of a Certificate of Share Exchange by the Virginia State Corporation
Commission each share of Wilson/Bennett Class A Stock and Class B
Stock issued and outstanding on the Effective Date shall be exchanged for a pro
rata share of (y) shares of Cardinal Common Stock with a Fair 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)                                 If
the 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) shall
be reduced by $1.00 for every dollar of the deficiency.  If the tangible net worth of Wilson/Bennett
on the Effective Date exceeds $42,000, the value of the exchange consideration
shall be increased by $1.00 for every dollar of such excess.  Cardinal shall have the right after the
Effective Date to audit the net worth of Wilson/Bennett as of the Effective
Date.  The exchange consideration shall
be retroactively adjusted if such audit discloses any error or inaccuracy in
the balance sheet of Wilson/Bennett on the Effective Date.  Any such adjustment shall be settled by a
cash payment to or by the Shareholders. 
The parties intend that this subsection operate such that the net
income of Wilson/Bennett, computed according to generally accepted accounting
principles, earned with respect to services performed by it before the
Effective Date shall be paid out to the shareholders, as long as such payments
do 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)                                  If
at the Effective Date, clients of Wilson/Bennett representing more than ten
percent (10%) of Assets Under Management shall have terminated or notified
Wilson/Bennett of an intent to terminate Investment Contracts, the exchange
consideration described in Section 2.1 shall be reduced.  The reduced exchange consideration shall be
calculated by multiplying $6,600,000 by a fraction, the numerator of which is
one hundred percent (100%) minus the percentage of Assets Under Management held
by clients who have terminated or given notice of an intent to terminate
Investment Contracts and the denominator of which is 90%.

 

(d)                                 If
the exchange consideration described in Section 2.1(a) is adjusted
pursuant to Section 2.1(b) or 2.1(c), the adjustment shall be to the cash
portion of the exchange consideration and not to the aggregate Fair Market
Value of the shares of Cardinal Common Stock to be issued.

 

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

 

A-2

 

ARTICLE 3

 

3.1                                 Manner
of Conversion.  As promptly as
practicable after the Effective Date, Cardinal shall cause its stock transfer
agent, acting as the exchange agent (“Exchange Agent”), to send to each former
shareholder of record of Wilson/Bennett immediately prior to the Effective Date
transmittal materials for use in exchanging such shareholder’s certificates of Wilson/Bennett
Class A Stock and Class B. Stock for the consideration set forth in Section 3.1
above and Section 3.3 below.  Any
fractional share checks which a Wilson/Bennett shareholder shall be entitled to
receive in exchange for such shareholder’s shares of Wilson/Bennett Class A
Stock and Class B, and all dividends paid on any shares of Cardinal Common
Stock that such shareholder shall be entitled to receive prior to the delivery
to the Exchange Agent of such shareholder’s certificates representing all of
such shareholder’s shares of Wilson/Bennett Class A Stock and Class B
Stock will be delivered to such shareholder only upon delivery to the Exchange
Agent of the certificates representing all of such shares (or indemnity
satisfactory to Cardinal and the Exchange Agent, in their judgment, if any of
such certificates are lost, stolen or destroyed).  No interest will be paid on any such
fractional share checks or dividends to which the holder of such shares shall
be entitled to receive upon such delivery.

 

3.2                                 Fractional
Shares.  Cardinal shall issue cash in
lieu of fractional shares.  Cardinal will
pay the value of such fractional shares in cash on the basis of the Fair Market
Value per share of Cardinal Common Stock.

 

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

 

A-3

 

EXHIBIT H

 

REGISTRATION
RIGHTS AGREEMENT

 

THIS REGISTRATION RIGHTS AGREEMENT (the “Agreement”),
dated as of April     , 2005, is made between Cardinal
Financial 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 Capital
Management, Inc., a Virginia corporation (“Wilson/Bennett”), entered into
an Agreement and Plan of Share Exchange dated April     ,
2005 (the “Share Exchange Agreement”), pursuant to which the Company acquired
Wilson/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 this
Agreement to provide certain registration rights to the Shareholders in order
to facilitate the distribution of the shares of Common Stock acquired by them pursuant
to the Share Exchange Agreement.

 

NOW, THEREFORE, in consideration of the mutual
covenants and agreements set forth herein, the Company and the Shareholders
hereby agree as follows:

 

ARTICLE I

 

Definitions

 

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

 

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

 

(b)                                 “Blue
Sky Filing” shall mean a filing made in connection with the registration or
qualification of the Registrable Shares under a particular state’s securities
or blue sky laws.

 

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

 

H-1

 

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

 

(e)                                  “Exchange
Act” 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 Exchange
Act as in effect on the date of this Agreement, and shall include, without
limitation, corporations, partnerships, limited liability companies and trusts.

 

(h)                                 “Prospectus”
shall mean the prospectus included in a Registration Statement (including a
prospectus that discloses information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
under the Securities Act), as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any portion of the
Registrable Shares covered by such Registration Statement, and all other
amendments and supplements to such prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in any such prospectus.

 

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

 

(j)                                     “Registration
Statement” shall mean a registration statement of the Company under the
Securities Act that covers the resale of the Registrable Shares pursuant to the
terms of this Agreement, including the related Prospectus, all amendments and
supplements to such registration statement, including pre- and post-effective
amendments, all exhibits thereto and all material incorporated by reference or
deemed to be incorporated by reference in such registration statement.

 

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

 

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

 

H-2

 

ARTICLE II

 

Registration of Securities

 

Section 2.1.                                Securities
Subject to this Agreement.  The
securities entitled to the benefits of this Agreement are the Registrable
Shares.  For the purposes of this
Agreement, one or more of the Registrable Shares will no longer be subject to
this Agreement when and to the extent that (i) a Registration Statement
covering such Registrable Shares has been declared effective under the
Securities Act and such Registrable Shares have been sold pursuant to such
effective Registration Statement, (ii) such Registrable Shares are
distributed to the public pursuant to Rule 144 under the Securities Act, (iii) such
Registrable Shares shall have been otherwise transferred or disposed of, new
certificates therefor not bearing a legend restricting further transfer or
disposition shall have been delivered by the Company and, at such time,
subsequent transfer or disposition of such securities shall not require
registration or qualification of such Registrable Shares under the Securities
Act or any similar state law then in force, or (iv) such Registrable
Shares have ceased to be outstanding.

 

Section 2.2.                                Demand
Registration.

 

(a)                                  The
Shareholders shall have the right to make one written request to the Company
for the registration of Registrable Shares subject to this Agreement that are
beneficially owned by the Shareholders at the time of the request, subject to
the following provisions:

 

(1)                                  The
maximum number of Registrable Shares that may be included in such written
request shall be one-third of such shares; provided, however, that, in the
event that (i) a Change of Control (as defined below) has occurred with
respect 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, a
Change of Control occurs if (i) any person, including a “group” as defined
in Section 13(d)(3) of the Exchange Act becomes the owner or
beneficial owner of Common Stock having 40% or more of the combined voting
power of the then outstanding Common Stock that may be cast for the election of
the Company’s directors other than a result of an issuance of securities
initiated by the Company, or open market purchases approved by the Company’s
Board of Directors, as long as the majority of the Board of Directors approving
the purchases is a majority at the time that the purchases are made; or (ii) as
the direct or indirect result of, or in connection with, a tender or exchange
offer, a merger or other business combination, a sale of assets, a contested
election of directors, or any combination of these events, the persons who were
directors of the Company before such events cease to constitute a majority of
the Company’s Board of Directors, or any successor’s board, within two years of
the last of such transactions.  For
purposes of Section 2.2(a)(1) above, a Change of Control occurs on
the date on which an event described in (i) or (ii) above
occurs.  If a Change of Control occurs on
account of a series of transactions or events, the Change of Control occurs on
the date of the last of such transactions or events.

 

H-3

 

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

 

(b)                                 The
Shareholders shall have the right to make one additional request to the Company
for the registration of Registrable Shares subject to this Agreement that are
beneficially owned by the Shareholders at the time of the request, provided
that the Shareholders have previously made a request under Section 2.2(a) above
and subsequent to that request either (i) a Change of Control (as defined
below) has occurred with respect to the Company or (ii) the Company’s
employment of Bernard H. Clineburg as its the chief executive officer has
terminated for any reason.  The maximum
number of Registrable Shares that may be included in such additional request
shall be all of the Registrable Shares, less any shares included in the prior
request made under Section 2.2(a) above.

 

(c)                                  The
Company shall have the option to purchase the shares of Common Stock covered by
a request under either Section 2.2(a) or (b) above directly from
the Shareholders.  In order to exercise
this option, the Company shall provide the Shareholders with written notice of
its intention to do so to the Shareholders within 10 days of the receipt of
such request.  The purchase of such
shares by the Company shall be completed with 30 days of the receipt of such
request, and the purchase price for the shares shall be the average closing
sale price on Nasdaq for sales of shares of Common Stock for the 20 days on
which shares of Common Stock trade immediately preceding the fifth day before
the date of such written notice from the Company, adjusted, if necessary, for
any stock split or stock dividend, during such twenty (20) day period.

 

(d)                                 Upon
the 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 Registration
Statement with the SEC under the Securities Act to register the resale of the
Registrable Shares as set forth in such request and (ii) use its best
efforts to cause such Registration Statement to become effective as soon as
practicable after the filing thereof with the SEC.  On or before the Closing Date, the Company
shall have listed on Nasdaq, on a when issued basis, the Registrable Shares
(except to the extent that such Registrable Shares have been listed
previously).

 

(e)                                  The
Company shall use its best efforts to maintain the effectiveness of the
Registration Statement relating to the Registrable Shares, and maintain the
listing of such shares, as applicable, on Nasdaq or any exchange or automated
interdealer quotation system on which the Common Stock is then listed or
quoted, during the Effective Period.

 

(f)                                    The
Company shall not be obligated to register any of the Registrable Shares held
by an Affiliate of the Shareholders.

 

H-4

 

Section 2.3.                                Registration
Procedures.  In order to comply with
the requirements of Section 2.2 above, the Company will:

 

(a)                                  prepare
and file with the SEC a Registration Statement covering the Registrable Shares
on Form S-3, if the Company is eligible to use such form, or such other
form or forms for which the Company then qualifies and that counsel for the
Company shall deem appropriate, and which form shall be available for the sale
of the Registrable Shares on a delayed or continuous basis in accordance with Rule 415
under the Securities Act (or any successor rule); provided, however,
that the methods of distribution permitted by such Registration Statement shall
not include underwritten offerings.

 

(b)                                 prepare
and file with the SEC pre- and post-effective amendments to the Registration
Statement and such amendments and supplements to the Prospectus used in
connection therewith as may be required by the rules, regulations or
instructions applicable to the registration form utilized by the Company, or by
the Securities Act or the rules and regulations thereunder, and cause the
Prospectus as so supplemented to be filed pursuant to Rule 424 under the
Securities Act, and otherwise comply with the provisions of the Securities Act
with respect to the disposition of the Registrable Shares;

 

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

 

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

 

(e)                                  notify
the Shareholders, at any time when a Prospectus is required to be delivered
under 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 Registration
Statement, as then in effect, includes an untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, and prepare and furnish to the Shareholders a reasonable number of
copies of an amendment to such Prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such Registrable Shares, such
Prospectus shall not include an untrue statement of a

 

H-5

 

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

 

(f)                                    notify
the Shareholders

 

(1)                                  when
any Prospectus or Prospectus supplement or pre- or post-effective amendment has
been filed, and, with respect to the Registration Statement or any post-effective
amendment, when such Registration Statement or post-effective amendment has
become effective;

 

(2)                                  of
any request by the SEC or any other applicable regulatory authority for
amendments or supplements to the Registration Statement or Prospectus or for
additional information;

 

(3)                                  of
the issuance by the SEC or any other applicable regulatory authority of any
stop order of which the Company or its counsel is aware suspending the
effectiveness of the Registration Statement or any order preventing the use of
a related Prospectus, or the initiation or any threats of any proceedings for
such purpose; and

 

(4)                                  of
the receipt by the Company of any written notification of the suspension of the
registration or qualification of any of the Registrable Shares for sale in any
jurisdiction, or the initiation or any threats of any proceeding for such
purpose;

 

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

 

(h)                                 provide
for the Company’s transfer agent at the time to serve as transfer agent and
registrar for the Registrable Shares covered by the Registration Statement no
later than the effective date of such Registration Statement;

 

(i)                                     cooperate
with the Shareholders to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legends) representing the securities
to be sold under the Registration Statement, and enable such securities to be
in such denominations and registered in such names as the Shareholders may
reasonably request;

 

(j)                                     provide
the Shareholders and any attorney, accountant or other agent retained by the
Shareholders (collectively, the “Inspectors”) with reasonable access during
normal business hours to appropriate officers of the Company and its
subsidiaries to ask questions and to obtain information that any such Inspector
may reasonably request and make available for inspection all financial and
other records, pertinent corporate documents and properties of any of the
Company and its subsidiaries (collectively, the “Records”), as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility; provided, however, that the Records that the

 

H-6

 

Company determines, in good faith, to be confidential and that it
notifies the Inspectors in writing are confidential shall not be disclosed to
any Inspector unless such Inspector signs or is otherwise bound by a
confidentiality agreement reasonably satisfactory to the Company; and

 

(k)                                  in
the event of the issuance of any stop order of which the Company or its counsel
is aware suspending the effectiveness of the Registration Statement or any
order suspending or preventing the use of any related Prospectus or suspending
the registration or qualification of any Registrable Shares for sale in any
jurisdiction, the Company promptly will use its best efforts to obtain its
withdrawal.

 

The Shareholders shall furnish to the Company in
writing such information regarding the Shareholders and their Affiliates as is
required to be disclosed pursuant to the Securities Act. The Shareholders agree
to notify the Company promptly of any inaccuracy or change in information
previously furnished by the Shareholders to the Company or of the happening of
any event in either case as a result of which the Registration Statement, a
Prospectus, or any amendment or supplement thereto contains an untrue statement
of a material fact regarding the Shareholders or any of their Affiliates or
omits to state a material fact regarding the Shareholders or any of their
Affiliates required to be stated therein or necessary to make the statements
therein not misleading and to furnish promptly to the Company any additional
information required to correct and update any previously furnished information
or required so that such Registration Statement, Prospectus, or amendment or
supplement, shall not contain, with respect to the Shareholders or any of their
Affiliates, an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading.

 

The Shareholders agree that, upon receipt of any notice
from the Company of the happening of any event of the kind described in
Sections 2.3(e) or (k) above, the Shareholders will forthwith discontinue
(and cause any Affiliate to discontinue) the transfer or disposition of any
Registrable Shares pursuant to the Prospectus relating to the Registration
Statement covering such Registrable Shares until the Shareholders’ receipt of
the copies of the amended or supplemented Prospectus contemplated by Section 2.3(e) or
the withdrawal of any order contemplated by Section 2.3(k), and, if so
directed by the Company, the Shareholders will deliver to the Company all
copies, other than permanent file copies then in the Shareholders’ possession,
of the Prospectus covering such Registrable Shares at the time of receipt of
such notice.  The period during which any
discontinuance under this paragraph is in effect is referred to herein as a “Discontinuance
Period.”

 

Section 2.4.                                Registration
Expenses.  In connection with the
registration of the Registrable Shares pursuant to Section 2.2 above, the
Company will pay any and all out-of-pocket expenses incident to the Company’s
performance of or compliance with this Agreement, including, without
limitation, (i) all registration and filing fees with the SEC relating to
the Registrable Shares, (ii) all fees and expenses of complying with state
securities or blue sky laws, (iii) all printing and delivery expenses, (iv) all
fees and expenses incurred in connection with the listing of the Registrable
Shares on Nasdaq, or any other exchange or automated interdealer quotation
system as then applicable, (v) the fees and disbursements of the Company’s

 

H-7

 

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

 

ARTICLE III

 

Holdback Period

 

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

 

ARTICLE IV

 

Indemnification; Contribution

 

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

 

H-8

 

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

 

Section 4.2.                                Indemnification
by the Shareholders.  The
Shareholders will, and hereby agree to, indemnify and hold harmless and,
subject to Section 4.3 below, defend (in the same manner and to the same
extent as set forth in Section 4.1 above), hold harmless and defend, the
Company and the Company’s officers, directors, employees, agents,
representatives and each other Person, if any, who controls the Company within
the meaning of the Securities Act, with respect to any such untrue statement or
alleged untrue statement in, or any such omission or alleged omission from, the
Registration Statement, any Prospectus, or any amendment or supplement thereto,
if such statement or omission was made in reliance upon and in conformity with
information furnished in writing to the Company by the Shareholders from time
to time specifically for use in the Registration Statement, the Prospectus, and
any such amendment or supplement thereto. 
Such indemnity shall remain in full force and effect, regardless of any
investigation made by or on behalf of the Company or any such director, officer
or any other Person and shall survive the transfer of such securities by the
Shareholders.  The liability of an
indemnifying party under this Section 4.2 shall be limited to the amount
of the net proceeds received by such indemnifying party upon the resale of any
Registrable Shares pursuant to the Registration Statement creating such
liability.

 

Section 4.3.                                Notices
of Claims.  Promptly after receipt by
an indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in Sections 4.1 and 4.2 above, such indemnified
party will give, if a claim in respect thereof is to be made against an
indemnifying party, written notice to the latter of the commencement of such
action, provided that the failure of any indemnified party to give notice as
provided herein shall not relieve the indemnifying party of its obligations
under this Article IV, except to the extent that the indemnifying party is
actually prejudiced in any material respect by such failure to give
notice.  In case any such action is
brought against an indemnified party, the indemnifying party shall be entitled
to participate in and, unless in such indemnified party’s reasonable judgment a
conflict of interest between such indemnified and indemnifying parties may
exist in respect of such claim, to assume the defense thereof, jointly with any
other indemnifying party similarly

 

H-9

 

notified to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and, after notice from the indemnifying
party to such indemnified party of its election to assume the defense thereof,
the indemnifying party shall not be liable to such indemnified party for any
legal or other expenses subsequently incurred by the latter in connection with
the defense thereof other than reasonable costs of reasonable
investigation.  If the indemnifying party
advises an indemnified party that it will contest a claim for indemnification
hereunder, or fails, within 30 days of receipt of any indemnification notice to
notify, in writing, such Person of its election to defend, settle or
compromise, at its sole cost and expense, any action, proceeding or claim (or
discontinues its defense at any time after it commences such defense), then the
indemnified party may, at its option, defend, settle or otherwise compromise or
pay such action or claim in each case at the indemnifying party’s expense.  In any event, unless and until the
indemnifying party elects in writing to assume and does so assume the defense
of any such claim, proceeding or action, the indemnified party’s reasonable
costs and expenses arising out of the defense, settlement or compromise of any
such action, claim or proceeding shall be losses subject to indemnification
hereunder.  The indemnified party shall
cooperate fully with the indemnifying party in connection with any negotiation
or defense of any such action or claim by the indemnifying party and shall
furnish to the indemnifying party all information reasonably available to the
indemnified party that relates to such action or claim.  The indemnifying party shall keep the
indemnified party fully informed at all times as to the status of the defense
or any settlement negotiations with respect thereto.  If the indemnifying party elects to defend
any such action or claim, then the indemnified party shall be entitled to
participate in such defense with counsel of its choice at its sole cost and
expense, except that the indemnifying party shall be liable for such reasonable
costs and expenses if, in such indemnified party’s reasonable judgment, a
conflict of interest between such indemnified and indemnifying parties may
exist as described above.  If the indemnifying
party does not assume such defense, the indemnified party shall keep the
indemnifying 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 not
affect the obligations of the indemnifying party hereunder.  No indemnifying party shall be liable for any
settlement of any action, claim or proceeding effected without its written
consent; provided, however, that the indemnifying party shall not
unreasonably withhold, delay or condition its consent.  No indemnifying party shall, without the
written consent of the indemnified party, consent to entry of any judgment or
enter into any settlement that does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
general written release from all liability with respect to such claim or
litigation.

 

Section 4.4.                                Indemnification
Payments.  The indemnification
required by this Article IV shall be made by periodic payments of the
amount thereof during the course of the investigation or defense as and when
bills are received or Losses are incurred, subject to the receipt of such
documentary support therefor as the indemnifying party may reasonably request.

 

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

 

H-10

 

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

 

Section 4.6.                                Other
Rights and Liabilities.  The
indemnity and contribution agreements contained herein shall be in addition to (i) any
cause of action or similar right of the indemnified party against the
indemnifying party or others and (ii) any liabilities the indemnifying
party may be subject to pursuant to the law.

 

ARTICLE V

 

Miscellaneous

 

Section 5.1.                                Notices.  Any notices or other communications
required 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:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

H-11

 

	
  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 or
other communications shall be deemed received (a) in the case of any
notice or communication sent other than by mail, on the date actually delivered
to such address (evidenced, in the case of delivery by overnight courier, by
confirmation of delivery from the overnight courier service making such
delivery, and in the case of a telecopy, by receipt of a transmission
confirmation form or the addressee’s confirmation of receipt), or (b) in
the case of any notice or communication sent by mail, three Business Days after
being sent, if sent by registered or certified mail, with first-class postage
prepaid.  Each of the parties hereto
shall be entitled to specify a different address by giving notice as aforesaid
to each of the other parties hereto.

 

Section 5.2.                                Amendments,
Waivers, Etc.  This Agreement may not
be amended, changed, supplemented, waived or otherwise modified or terminated
except by an instrument in writing signed by the Company and the Shareholders.

 

Section 5.3.                                Successors
and Assigns.  Except as otherwise
provided herein, this Agreement shall be binding upon and shall inure to the
benefit of and be enforceable by the parties and their respective successors
and assigns, including without limitation in the case of any corporate party
hereto any corporate successor by merger or otherwise; provided that no
party may assign this Agreement without the other party’s prior written
consent.

 

Section 5.4.                                Entire
Agreement.  This Agreement embodies
the entire agreement and understanding among the parties relating to the
subject matter hereof and supersedes all prior agreements and understandings
relating to such subject matter.  There
are no representations, warranties or covenants by the parties hereto relating
to such subject matter other than those expressly set forth in this Agreement
and the Share Exchange Agreement.

 

Section 5.5.                                Specific
Performance.  The parties acknowledge
that money damages are not an adequate remedy for violations of this Agreement
and that any party may, in its sole discretion, apply to a court of competent
jurisdiction for specific performance or injunctive or such other relief as
such court may deem just and proper in order to enforce this Agreement or

 

H-12

 

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

 

Section 5.6.                                Remedies
Cumulative.  All rights, powers and
remedies provided under this Agreement or otherwise available in respect hereof
at law or in equity shall be cumulative and not alternative, and the exercise
or beginning of the exercise of any thereof by any party shall not preclude the
simultaneous or later exercise of any other such right, power or remedy by such
party.

 

Section 5.7.                                No
Waiver.  The failure of any party
hereto to exercise any right, power or remedy provided under this Agreement or
otherwise available in respect hereof at law or in equity, or to insist upon
compliance by any other party hereto with its obligations hereunder, and any
custom or practice of the parties at variance with the terms hereof, shall not
constitute a waiver by such party of its right to exercise any such or other
right, power or remedy or to demand such compliance.

 

Section 5.8.                                No
Third Party Beneficiaries.  Except as
provided in Article IV above, this Agreement is not intended to be for the
benefit of and shall not be enforceable by any Person who or which is not a
party hereto.

 

Section 5.9.                                Consent
to Jurisdiction.  Each party to this
Agreement, by its execution hereof, (i) hereby irrevocably submits, and
agrees to cause each of its Affiliates to submit, to the jurisdiction of the
federal courts located in Virginia, and in the event that such federal courts
shall not have subject matter jurisdiction over the relevant proceeding, then
of 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 or
based upon this Agreement or relating to the subject matter hereof or the
transactions contemplated hereby, (ii) hereby waives, and agrees to cause
each of its Affiliates to waive, to the extent not prohibited by applicable
law, and agrees not to assert, and agrees not to allow any of its Affiliates to
assert, by way of motion, as a defense or otherwise, in any such Action, any
claim that it is not subject personally to the jurisdiction of the above-named
courts, 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 or
by such court and (iii) hereby agrees not to commence or to permit any of
its Affiliates to commence any Action arising out of or based upon this
Agreement or relating to the subject matter hereof other than before one of the
above-named courts nor to make any motion or take any other action seeking or
intending to cause the transfer or removal of any such Action to any court
other than one of the above-named courts whether on the grounds of inconvenient
forum or otherwise.  Each party hereby
consents to service of process in any such proceeding in any manner permitted
by Virginia law, as the case may be, and agrees that service of process by
registered or certified mail, return receipt requested, at its address
specified pursuant to Section 5.1 above is reasonably calculated to give
actual notice.  Notwithstanding anything
contained 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 this
Agreement, an Affiliate of a party to

 

H-13

 

this Agreement, or an assignee thereof (a “Third Party Action”), in a
forum 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 omissions
pursuant to this Agreement, then the party to this Agreement, including its
Affiliates, joined as a defendant in such Third Party Action shall have the
right to file cross-claims or third-party claims in the Third Party Action
against the other party to this Agreement, including its Affiliates, and even
if not a defendant therein, to intervene in such Third Party Action with or
without also filing cross-claims or third-party claims against the other party
to this Agreement, including its Affiliates.

 

Section 5.10.                         Governing
Law.  This Agreement shall be
governed by and construed in accordance with the domestic substantive law of
the Commonwealth of Virginia, without giving effect to any choice or conflict
of law provision or rule that would cause the application of the law of
any other jurisdiction.

 

Section 5.11.                         Name,
Captions.  The name assigned to this
Agreement and the section captions used herein are for convenience of
reference only and shall not affect the interpretation or construction hereof.

 

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

 

Section 5.13.                         Expenses.  Each of the parties hereto shall bear their
own expenses incurred in connection with this Agreement and the transactions
contemplated hereby, except that in the event of a dispute concerning the terms
or enforcement of this Agreement, the prevailing party in any such dispute
shall be entitled to reimbursement of reasonable legal fees and disbursements
from the other party or parties to such dispute.

 

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

 

 

[SIGNATURES ON NEXT PAGE]

 

H-14

 

IN WITNESS WHEREOF,
the parties hereto, intending to be legally bound hereby, have caused this
Registration Rights Agreement to be executed, as of the date first above
written 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

  
					

 

H-15

 

EXHIBIT I

 

EMPLOYMENT
AGREEMENT

 

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 CAPITAL
MANAGEMENT, INC., a Virginia corporation, hereinafter called the “Corporation”,
and JOHN W. FISHER, hereinafter called the “Employee”,
and provides as follows:

 

RECITALS

 

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

 

WHEREAS, the
Employee is presently the duly elected President and Chief Executive Officer of
the Corporation and, as such, is a key Employee officer of the Corporation
whose continued dedication, availability, advice and counsel to the Corporation
is deemed important to the Board of Directors, the Corporation and its
stockholders; and

 

WHEREAS, the
services of the Employee, his experience and knowledge of the affairs of the
Corporation, and his reputation and contacts in the industry are valuable to
the Corporation; and

 

WHEREAS, the
Corporation wishes to attract and retain such well-qualified Employees and it
is in the best interests of the Corporation and of the Employee to secure the
continued services of the Employee; and

 

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

 

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

 

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

 

WHEREAS, the
Corporation and Employee understand and acknowledge that the execution of this
Agreement is a material inducement for Cardinal to enter into the Share
Exchange Agreement;

 

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NOW, THEREFORE,
to assure the Corporation of the Employee’s continued dedication, the
availability of his advice and counsel to the Board of Directors, and to induce
the Employee to remain and continue in the employ of the Corporation and for
other good and valuable consideration, the receipt and adequacy whereof each
party hereby acknowledges, the Corporation and the Employee hereby agree as
follows:

 

TERMS OF AGREEMENT

 

Section 1.  Employment. (a)     Employee shall be employed as the
President and Chief Executive Officer of the Corporation to perform such
services for the Corporation and/or one or more Affiliates which are customary
and appropriate for a chief executive officer as may be assigned to Employee by
the Corporation from time to time upon the terms and conditions hereinafter set
forth.

 

(b)                                 References
in this Agreement to services rendered for the Corporation and compensation and
benefits payable or provided by the Corporation shall include services rendered
for 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 performs
services.  References in this Agreement
to “Affiliate” shall mean any business entity that, directly or indirectly,
through one or more intermediaries, is controlled by the Corporation.

 

(c)                                  Employee
acknowledges that he is entering into this Agreement on his own free will and
that 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 and
continue until April 30, 2008 (the “Employment Period”) unless sooner terminated
under the terms of this Agreement. 
Beginning on April 30, 2008 and each April 30 thereafter, the
Employment Period and this Agreement and all its terms and provisions shall be
automatically extended for one additional year, unless prior notice of
non-renewal is provided by the Corporation or Employee or employment under this
Agreement 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 rendering
services on behalf of the Corporation in furtherance of its best interests.
Employee shall comply with all policies, standards and regulations of the
Corporation now or hereafter promulgated, and shall perform his duties under
this Agreement to the best of his abilities and in accordance with standards of
conduct appropriate for the chief executive officer of a registered investment
advisor.

 

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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 twice
monthly.

 

(b)                                 For each calendar year, or part thereof,
Employee shall be entitled to a bonus equal to 10% of the net income of
Wilson/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 which
net income exceeds $1,000,000.

 

For 2005 the bonus formula
will be annualized.  For example, if the
Effective Date is July 1, 2005, the bonus will be 10% of the net income of
the Corporation for the period from July 1, 2005 to December 31, 2005
if such net income doe not exceed $500,000. 
If such net income exceeds $500,000, the bonus shall be $50,000, plus
20% of the amount by which net income exceeds $500,000.

 

If this Agreement terminates
during a year for any reason other than Cause or resignation without Good
Reason, the bonus for the year will be annualized.  For example, if this Agreement terminates on July 1
of a year, the bonus will be 10% of the net income of the Corporation for the
period from January 1, through June 30 if such net income does not
exceed $500,000.  If such net income
exceeds $500,000, the bonus shall be $50,000, plus 20% of the amount by which
net income exceeds $500,000.

 

In 2005 annualization shall
be based on the ratio of the number of days from the Effective Date to the end
of the year to the number of days in the year. 
In the year Employee’s employment terminates, annualization shall be
based on the ratio of the number of days in the year before the Date of
Termination to the number of days in the year.

 

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

 

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

 

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(d)                                 Except
as otherwise expressly set forth hereunder, no compensation shall be paid
pursuant to this Agreement in respect of any month or portion thereof
subsequent 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 in
any employee benefit plan maintained by the Corporation for which he is or will
become 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 be
entitled to participate in the Cardinal plans, as set forth in Section 5.1
of the Share Exchange Agreement. 
Notwithstanding the above, Employee will not be eligible to participate
in the Cardinal Bank Deferred Compensation Plan.  However on or after the Effective Date, he
will be eligible to participate in an executive deferred compensation plan that
is materially equivalent to the George Mason Mortgage, LLC Executive Deferred
Compensation Plan.

 

Section 6. 
Expense Account.  The
Corporation shall reimburse Employee for reasonable and customary business
expenses 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 not
reimbursable under Corporation policy. 
Employee agrees to timely submit records and receipts of reimbursable
items and agrees that the Corporation can adopt reasonable rules and
policies regarding such reimbursement. 
The Corporation agrees to make prompt payment to the Employee following
receipt and verification of such reports.

 

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

 

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

 

Section 9.  Termination. (a)  Notwithstanding
the termination of Employee’s employment pursuant to any provision of this
Agreement, the parties shall be required to carry out any provisions of this
Agreement which contemplate performance by them subsequent to such termination,
including the Corporation’s obligations under Section 10 and the Employee’s
obligations under Section 11.  In
addition, no termination shall affect any liability or other obligation of
either party which shall have accrued prior to such termination, including, but
not limited to, any liability, loss or damage on account of breach. No
termination of employment shall terminate the obligation of the Corporation to
make payments of any vested benefits provided hereunder or the obligations of
the Employee under Sections 11 and 12.

 

(b)                                 This
Agreement shall terminate upon death of the Employee. The Corporation may
terminate Employee’s employment under this Agreement, after having established
the Employee’s disability by giving to the Employee written notice of its intention
to terminate his employment for disability, and his employment with the
Corporation shall terminate effective on

 

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

 

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

 

(d)                                 The
Employee’s employment may be terminated by the Employee, in the Employee’s sole
discretion at any time during the Employment Period, with or without “Good
Reason.”

 

(e)                                  For
purposes of this Agreement,

 

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

 

(A)                              continued
willful failure, without Cure (as defined below), to perform substantially the
Employee’s duties with the Corporation (other than any such failure resulting
from incapacity due to physical or mental illness);

 

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

 

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

 

(D)                               acts
or conduct which result in the Employee becoming subject to an order of a
governmental agency or other regulatory body which prevents or materially
restricts the Employee in performing the Employee’s duties hereunder;

 

(E)                                 reporting
to work under the influence of alcohol, narcotics or unlawful controlled
substances, or any other material violation, without Cure (to the extent such
other material violation is capable of Cure), of any Corporation employment
policy or procedure or any other material violation of the Corporation’s
employment policy or procedure which has the potential to subject the
Corporation to legal liability;

 

I-5

 

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

 

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

 

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

 

(iii)                               “Good
Reason” shall mean a termination by Employee resulting from a material breach
by the Corporation of a material obligation of the Corporation under this
Agreement without Cure.  A breach
described in this clause shall include, but not be limited to:

 

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

 

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

 

(C)                                any
termination of the Employee’s employment which is not effected pursuant to the
terms of this Agreement.

 

(f)                                    Any
termination by the Corporation with or without Cause, or by the Employee with
or without Good Reason, shall be communicated by Notice of Termination to the
other party hereto in accordance with this Section and Section 16 of
this Agreement.  For purposes of this
Agreement, a “Notice of Termination” means a written notice which (i) indicates
the specific termination provision in this Agreement relied upon, and (ii) to
the extent applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Employee’s
employment under the provision so indicated. 
The failure by the Employee or the Corporation to set forth in the
Notice of Termination any fact or circumstance which contributes to a showing
of Good Reason or Cause shall not waive any right of the Employee or the Corporation
hereunder or preclude the Employee or the Corporation from asserting such fact
or circumstance in enforcing the Employee’s or the Corporation’s rights
hereunder.

 

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

 

I-6

 

which the Corporation or the Employee notifies the Employee or the
Corporation, as applicable, of such termination, and (iii) by reason of
death or disability, the date of death of the Employee or the Disability
Effective 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’s
employment other than for Cause, death or disability or the Employee shall
terminate employment for Good Reason, then the Corporation shall pay to the
Employee each month for 12 months one-twelfth of the Employee’s annual salary,
and the amounts set forth below:

 

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

 

(ii)                                  The
Employees’ bonus for the year in which his employment terminates calculated
according to Section 4(b).

 

(b)                                 If,
during the Employment Period, the Corporation shall terminate the Employee’s
employment for Cause or the Employee shall terminate his employment without
Good Reason, then the Corporation shall have no further obligation to the
Employee; provided the Corporation shall pay to the Employee, to the extent not
theretofore paid, the Employee’s accrued salary through the Date of Termination
and any bonus for the prior year that remains unpaid; and, provided further, in
order that Section 11(c) shall apply for twelve (12) months following
a termination of employment for cause or a resignation by Employee without Good
Reason, the Corporation may, at its option, pay to the Employee the same
amounts at the same times as set forth in Section 10(a).

 

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

 

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

 

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

 

I-7

 

(f)(1)  If Employee
resigns for any reason within three months after a Change of Control shall have
occurred, or within three months of the date that Bernard H. Clineburg ceases
to serve as the Corporation’s chief executive officer, then on or before
Employee’s last day of employment with the Corporation, the Corporation shall
pay to Employee as compensation for services rendered to the Corporation a cash
amount (subject to any applicable payroll or other taxes required to be
withheld) equal to one hundred fifty percent (150%) of the sum of the payments
received by him under Sections 4(a) and 4(b) in the 12 months that
precede the Date of Termination.  The
cash amount required to be paid hereby shall be paid by the Corporation in
equal monthly installments over the eighteen (18) months succeeding the date of
termination, payable on the first day of each such month.  Payment under this Section 8(f)(1) shall
be in lieu of any amount that is or might be due under Section 10(a).

 

(2)  For purposes of
this Agreement, a Change of Control occurs if, after the date of this
Agreement, (i) any person, including a “group” as defined in Section 13(d)(3) of
the Securities Exchange Act of 1934, becomes the owner or beneficial owner of
Corporation or Cardinal securities having 50% or more of the combined voting
power of the then outstanding Corporation or Cardinal securities that may be
cast for the election of the Corporation’s or Cardinal’s directors other than
as a result of an issuance of securities initiated by the Corporation’s or
Cardinal’s directors, or open market purchases approved by the Board of
Directors, as long as the majority of the Board of Directors approving the
purchases is a majority at the time the purchases are made; or (ii) as the
direct or indirect result of, or in connection with, a tender or exchange
offer, a share exchange or other business combination, a sale of assets, a
contested election of directors, or any combination of these events, the
persons who were directors of the Corporation or Cardinal before such events
cease to constitute a majority of the Corporation’s or Cardinal’s Board, or any
successor’s board, within two years of the last of such transactions.  For purposes of this Agreement, a Change of
Control occurs on the date on which an event described in (i) or (ii) occurs.  If a Change of Control occurs on account of a
series of transactions or events, the Change of Control occurs on the date of
the last of such transactions or events.

 

(3)  It is the
intention of the parties that no payment be made or benefit provided to
Employee pursuant to this Agreement that would constitute an “excess parachute
payment” within the meaning of Section 280G of the Code and any
regulations thereunder, thereby resulting in a loss of an income tax deduction
by the Corporation or the imposition of an excise tax on Employee under Section 4999
of the Code.  If the independent
accountants serving as auditors of the Corporation on the date of a Change of
Control (or any other accounting firm designated by the Corporation) determine
that some or all of the payments or benefits scheduled under this Agreement, as
well as any other payments or benefits on a Change of Control, would be
nondeductible by the Company under Section 280G of the Code, then the
payments scheduled under this Agreement will be reduced to one dollar less than
the maximum amount which may be paid without causing any such payment or
benefit to be nondeductible.  The
determination made as to the reduction of benefits or payments required
hereunder by the independent accountants shall be binding on the parties.  Employee shall have the right to designate
within a reasonable

 

I-8

 

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

 

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

 

(A)                              The
Corporation’s business has been built over a period of eleven (11) years
through the efforts of Employee; and

 

(B)                                That
all or substantially all relationships with the Corporation’s customers are
personal to Employee; and

 

(C)                                That
it is his intent, if the Share Exchange is consummated, that the Corporation’s
goodwill, including the value of the long term relationships he has developed
with the Corporation’s customers, shall, indirectly through its ownership of
the Corporation, become the property of Cardinal.

 

(ii)                                  By
entering into this Agreement, the Employee intends:

 

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

 

(B)                                To
induce Cardinal to consummate the Share Exchange.

 

(b)  Employee covenants and agrees that any and
all information concerning the customers, businesses and services of the
Corporation of which he has knowledge or access as a result of his association
with the Corporation in any capacity shall be deemed confidential in nature and
shall not, without the prior written consent of the Corporation, be directly or
indirectly used, disseminated, disclosed or published by Employee to third
parties other than in connection with the usual conduct of the business of the
Corporation.  Such information shall
expressly include, but shall not be limited to, information concerning the
Corporation’s asset management methods, other trade secrets, business
operations, business records, customer lists or other customer
information.  Upon termination of
employment the Employee shall deliver to the Corporation all originals and
copies of documents, forms, records or other information, in whatever form it
may exist, concerning the Corporation or its business, customers, products or
services.  In construing this provision
it is agreed that it shall be interpreted broadly so as to provide the Corporation
with the maximum protection.  This Section 11(b) shall
not be applicable to any information which, through no misconduct or negligence
of Employee, is disclosed to the public by anyone other than Employee or that
Employee, after notifying the Corporation, is compelled to disclose by legal process.

 

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

 

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

 

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

 

(d)                                 While
employed by the Corporation and for eighteen (18) months after the Employee’s
termination of employment with the Corporation for any reason, the Employee
will not, directly or indirectly, on behalf of the Employee or any other person
or entity, solicit or induce, or attempt to solicit or induce, any person
employed by the Corporation during the two-year period immediately prior to the
Employee’s termination, to
terminate his or her relationship with the Corporation and/or to enter into an
employment or agency relationship with the Employee or with any other person or
entity with whom the Employee is affiliated.

 

(e)                                  While
employed by the Corporation and for eighteen (18) months after the Employee’s
termination of employment with the Corporation for any reason, the Employee
will not, except to the extent necessary to carry out his duties as an employee
of the Corporation, directly or indirectly provide Competitive Services (as
defined below) to any Customer (as defined below), directly or indirectly, on
behalf of the Employee or any other person or entity, or solicit or divert away
or attempt to solicit or divert away any Customer of the Corporation for the
purpose of selling or providing Competitive Services, provided the Corporation
is then still engaged in the sale or provision of Competitive Services.

 

(f)(1)                      For
purposes of this Agreement, the term “Customer” means any individual or entity
to whom or to which the Corporation provided Competitive Services within two
years of Employee’s Date of Termination (or, within one year of the Date of
Termination, the Corporation had identified as a prospect for the provision of Competitive Services, and with
whom 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)                                  For
purposes of this Agreement, the Employee shall have had material contact with a
person or entity if (i) the Employee had direct business dealings with the
person or entity on behalf of the Corporation; (ii) the Employee was
responsible for supervising or coordinating the business dealings between the
person or entity and the Corporation; (iii) the Employee was responsible
for supervising or coordinating the identification of such person or

 

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

 

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

 

(g)                                 The
Employee agrees that the covenants in this Section 11 are reasonably
necessary to protect the legitimate interests of the Corporation, are reasonable with respect to time
and territory and do not interfere with the interests of the public.  The Employee further agrees that the
descriptions of the covenants contained in this Section 11 are
sufficiently accurate and definite to inform the Employee of the scope of the
covenants.  Finally, the Employee agrees
that the consideration set forth in the Share Exchange Agreement and in this
Agreement is full, fair and adequate to support the Employee’s obligations
hereunder and the Corporation’s rights hereunder before and after the effective
date of the Share Exchange.  The Employee
acknowledges that in the event the Employee’s employment with the Corporation
is terminated for any reason, the Employee will be able to earn a livelihood
without violating such covenants.

 

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

 

(i)                                     In
the event Employee shall desire to engage in any activity which Employee
believes could breach the covenants in this Section 11, Employee may give
notice of such desired activity to the Corporation, and the Corporation shall
advise Employee in writing, within thirty (30) days following receipt of such
notice, of its determination as to whether the proposed activity is permissible
hereunder, or whether the Corporation is willing to permit such activity even
if the Corporation believes such activity is not permissible hereunder.

 

I-11

 

(j)                                     The
parties intend that the covenants and restrictions in this Section 11 be
enforceable against Employee regardless of the reason that his employment by
the Corporation may terminate and that such covenants and restrictions shall be
enforceable against Employee even if this Agreement expires after a notice of
non-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 by
Employee with the Corporation, each and every one of the covenants and
restrictions set forth in Section 11 above are reasonable in scope, length
of time and geographic area and are necessary for the protection of the
significant investment of the Corporation in developing, maintaining and
expanding its business. Accordingly, the parties hereto agree that in the event
of any breach by Employee of any of the provisions of Section 11 that
monetary damages alone will not adequately compensate the Corporation for its
losses and, therefore, that it shall be entitled to any and all legal or
equitable relief available to it, specifically including, but not limited to,
injunctive relief, and the Employee shall be liable for all damages, including
actual and consequential damages, costs and expenses, including legal costs and
actual attorneys’ fees, incurred by the Corporation as a result of taking
action to enforce, or recover for any breach of, Section 11, or incidental
to a declaratory judgment action filed by Employee in which the Company is the
prevailing party.  The covenants
contained in Section 11 shall be construed and interpreted in any judicial
proceeding 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 to
the benefit of the Corporation and Employee and their respective heirs, legal
representatives, executors, administrators, successors and assigns. Neither
this Agreement, nor any of the rights hereunder, shall be assignable by the
Employee 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 or
otherwise) to all or substantially all of the business and/or assets of the
Corporation, or either one of them, by agreement in form and substance
satisfactory to the Employee, to expressly assume and agree to perform this
Agreement in its entirety. Failure of the Corporation to obtain such agreement
prior to the effectiveness of any such succession shall be a breach of this Agreement
and shall entitle the Employee to the compensation described in Section 10(a).

 

Section 14. 
Governing Law.  This
Employment Agreement shall be subject to and construed in accordance with the
laws of Virginia.

 

Section 15. 
Invalid Provisions.  The
invalidity or unenforceability of any provision of this Agreement shall not
affect 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 in
any jurisdiction shall, as to such jurisdiction, be valid and enforceable to
the fullest extent permitted by law without invalidating or affecting the
remaining provisions hereof,

 

I-12

 

and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other
jurisdiction.

 

Section 16. 
Notices.  Any and all
notices, designations, consents, offers, acceptance or other communications
provided for herein shall be given in writing and shall be deemed properly
delivered if delivered in person or by registered or certified mail, return
receipt requested, addressed in the case of the Corporation to its registered
office or in the case of Employee to his last known address.

 

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

 

Section 18. 
Entire Agreement.

 

(a)                                  This
Employment Agreement constitutes the entire agreement among the parties with
respect to the subject matter hereof and supersedes any and all other
agreements, either oral or in writing, among the parties hereto with respect to
the subject matter hereof.

 

(b)                                 This
Employment Agreement may be executed in one or more counterparts, each of which
shall be considered an original copy of this Agreement, but all of which
together shall evidence only one agreement.

 

Section 19. 
Amendment and Waiver.  This
Employment Agreement may not be amended except in accordance with the
Shareholder Agreement by an instrument in writing signed by or on behalf of
each 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, signed
by the Employee and on behalf of the Corporation by such officer as may be
specifically designated by the Board of Directors.  No waiver by either party hereto at any time
of any breach by the other party hereto of, or compliance with, any condition
or provision of this Agreement to be performed by such other party shall be
deemed a waiver of any similar or dissimilar provision or conditions at the
same or at any prior or subsequent time

 

Section 20. 
Captions.  The captions
used in this Employment Agreement are intended for descriptive and reference
purposes only and are not intended to affect the meaning of any Section hereunder.

 

 

[execution page to follow]

 

I-13

 

IN WITNESS WHEREOF, the Corporation has caused this
Employment Agreement to be signed by its duly authorized officer and Employee
has 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

  	
   

  
								

 

I-14Exhibit 10.1

 

FIRST AMENDMENT TO EMPLOYMENT AGREEMENT

 

THIS
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT (this “First Amendment”) is made and entered into as of the 13th
day of July, 2004, by and between STATION CASINOS, INC.,
a Nevada corporation, with its principal offices located at 2411 West Sahara
Avenue, Las Vegas, Nevada 89102 (the “Company”), and GLENN C. CHRISTENSON (the “Executive”).

 

WHEREAS,
the Company and the Executive are parties to an Employment Agreement, dated as
of May 20, 2003 (the “Employment Agreement”);
and

 

WHEREAS,
the Company and the Executive now desire to amend the Employment Agreement as
provided herein.

 

NOW,
THEREFORE, in consideration of the premises and the mutual
covenants contained herein and for other good and valuable consideration, the
Company and the Executive agree to the following:

 

1.             Subsection 1.18
of the Employment Agreement is hereby amended in full to read as follows:

 

“1.18       “Restricted Area” shall mean the City of
Las Vegas, Nevada, and the area within a twenty-five (25) mile radius of that
city; provided, however, that in the event the Executive
voluntarily terminates this Agreement pursuant to Subsections 6.3, 7.2 or
7.3, the Restricted Area shall (a) after the first twelve months of the
Restriction Period, exclude the Las Vegas Strip (which is defined as that area
bounded by Paradise Road and straight extensions thereof on the East,
Charleston Boulevard on the North, I-15 on the West, and Sunset Road on the
South) and (b) after a Change in Control, exclude Downtown Las Vegas (which is
defined as that area bounded by Eastern Avenue and straight extensions thereof
on the East, I-515 (U.S. Highway 93/95) on the North, I-15 on the West, and
Charleston Boulevard on the South).”

 

2.             Capitalized
terms not otherwise defined in this First Amendment shall have the meanings set
forth in the Employment Agreement.

 

3.             Except
as expressly amended by this First Amendment, all other terms and provisions of
the Employment Agreement shall remain unaltered, are hereby reaffirmed, and shall
continue in full force and effect.

 

4.             This
First Amendment may be executed in counterparts, each of which shall be deemed
an original and all of which shall constitute one and the same document, with
the same effect as if all parties had signed on the same page.

 

 

	
   

  	
  Executive’s Initials  

  	
  /s/
  LJF

  
	
   

  	
   

  	
   

  
	
   

  	
  Company’s
  Initials  

  	
  /s/ GCC

  

 

1

 

IN WITNESS WHEREOF, the
undersigned have executed this First Amendment as of the date first written
above.

 

 

	
   

  	
  STATION
  CASINOS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Lorenzo J.
  Fertitta

  
	
   

  	
  Name:

  	
  Lorenzo J.
  Fertitta

  
	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Glenn C.
  Christenson

  
	
   

  	
  GLENN
  C. CHRISTENSON

  

 

2

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