Exhibit 99.2
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of October 1, 1997, and restated as of
February 26, 2003, by and between M.D.C. Holdings, Inc. (the "Company"), and
David D. Mandarich (the "Executive").
WHEREAS, the Executive has served the Company in
various capacities for over twenty years;
WHEREAS, the Company desires to assure itself of the
services of the Executive for the period provided in
this Agreement; and
WHEREAS, the Executive is willing to serve in the
employ of the Company for such period upon the terms and
conditions hereinafter provided;
NOW, THEREFORE, in consideration of Executive's past,
present and future performance of services for the Company and in consideration
of the mutual promises and agreements hereinafter set forth, the Company and the
Executive agree as follows:
1. Employment and Duties. The Company shall employ the
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Executive, and the Executive shall be employed by the Company, as President and
Chief Operating Officer, at the Company's headquarters in Denver, Colorado (or
such other location as the Executive and Company may agree) for the term of this
Agreement. In this capacity, the Executive shall perform such services,
consistent with his office, as from time to time shall be assigned to him by the
Board of Directors of the Company, devoting such time and effort to manage,
operate and direct the activities of the Company and perform all of the
functions of the offices held by him, as directed by the Board of Directors from
time-to-time; provided however that the Executive may also engage in other
activities (except activities which are in direct conflict with the business of
the Company) consistent with his prior practices while employed by the Company,
so long as such activities do not adversely affect the performance by the
Executive of his duties and responsibilities hereunder.
2. Term. The term of the Executive's employment hereunder
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shall begin on October 1, 1997 and shall continue through September 30, 2002
(the "Initial Term"); provided, however, that the term of employment shall be
automatically extended beyond the Initial Term for successive two-year periods
(each, an "Additional Term") unless the Company or the Executive shall give
written notice to the other party hereto of its or his intent to terminate this
Agreement at the end of the then current Term, such notice to be given at least
six months prior to the expiration of the Initial Term or any extension thereof
(the Initial Term and any and all Additional Terms are hereinafter collectively
referred to as the "Employment Term").
3. Compensation and Benefits.
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(a) Base Salary. During each calendar year of
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the Employment Term, the Company shall pay the Executive a base salary at a rate
of not less than $500,000 per year
(the "Base Salary"), payable in substantially equal semi-monthly installments.
Not less frequently than annually, Executive will be eligible for periodic
increases in Base Salary under the Company's normal policies and procedures for
executive salary increases which currently provide for annual reviews of
executive salaries. Executive's Base Salary for any year may not be reduced
below the Executive's Base Salary for the prior year without the consent of both
Executive and the Company; provided, however, that in the event that the base
salaries of all Senior Executive Officers of the Company (as hereinafter
defined) are reduced below their base salaries for the current or prior year,
the Executive's Base Salary shall be proportionately reduced without his
consent. For purposes of this Agreement, the "Senior Executive Officers" of the
Company shall be the ten officers of the Company having the highest annual base
salaries.
(b) Annual Incentive Compensation. For calendar year
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1997 and the remainder of the Employment Term, Executive will participate in the
Company's Executive Officer Performance Based Compensation Plan as it may be
amended, and any successor or supplementary incentive compensation plans
established by the Company (the "Performance Plans") and shall be entitled to
incentive payments as provided thereunder and as otherwise provided by the
Company. The payments the Executive is entitled to receive under the Performance
Plans and this Section 3(b) shall be referred to herein as the "Annual Incentive
Compensation" for the year to which they are attributable, regardless of the
year in which they are paid.
(c) Long-Term Incentive Compensation. The Executive
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shall participate in the Company's Employee Equity Incentive Plan, as it may be
amended, and any successor or supplementary compensation and incentive plans or
programs established by the Company (the "Equity Plans").
(d) Retirement Benefit. The Company shall pay the
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Executive a retirement benefit ("Retirement Benefit") as hereinafter defined in
consideration of the Executive's past, present and future services to the
Company. Except as otherwise expressly provided in Section 4, the Retirement
Benefit shall be paid in monthly installments commencing on the first day of the
month following the last day of the Employment Term (the "Commencement Date")
and shall continue for the duration of Executive's lifetime. The monthly
installments shall be based upon an annual amount determined as follows: the
Retirement Benefit for each year shall be equal to seventy percent (70%) of the
Executive's highest Base Salary during the final three (3) years of the
Employment Term. Notwithstanding the preceding or any other provision of this
Agreement to the contrary, the Retirement Benefit shall be payable only if the
Executive continues to be employed hereunder for the duration of the Initial
Term or if the Executive's employment is terminated hereunder prior to the
expiration of the Initial Term due to (1) the Executive's election to terminate
his employment pursuant to Section 4(d)(ii) hereof, (2) the Executive's death or
his becoming Totally Disabled (as defined in Section 4(a)(i) hereof) or (3) a
termination by the Company without Cause (as defined in Section 4(b) hereof).
(e) Medical Insurance Benefits. During the Employment
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Term and for the duration of Executive's lifetime after the Commencement Date,
the date Executive becomes Totally Disabled, the date of Executive's termination
without Cause or Executive's election to
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terminate his employment pursuant to Section 4(d)(ii) hereof, as the case may
be, the Company shall pay for and make available medical insurance coverage for
Executive for the duration of Executive's life. The medical insurance coverage
shall provide coverage and benefits that are at least comparable to that
provided to actively employed Senior Executive Officers of the Company. After
the Executive is eligible for Medicare and the Company becomes a secondary payor
(or its equivalent) pursuant to Medicare or other applicable law, the Company
shall provide and pay for secondary medical insurance coverage so that the
combined primary and secondary coverage is equivalent to that provided to
actively employed Senior Executive Officers of the Company. In addition such
medical insurance shall provide comparable coverage for: (i) Executive's spouse
for the duration of Executive's life and if she survives him for an additional
twenty-four months after Executive's death; and (ii) each of Executive's
children until such child is no longer a "dependent" of the Executive, as
defined in Section 152 of the Internal Revenue Code of 1986, as amended (the
"Internal Revenue Code"); provided, however, that the medical coverage under
this Section 3(e) for the Executive's spouse and children shall in no event
extend beyond five years after the commencement of the Executive's Retirement
Benefit.
(f) Expense Reimbursement. The Company promptly shall
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pay, or reimburse the Executive for, all ordinary and necessary business
expenses incurred by him in the performance of his duties hereunder including,
but not limited to, expenses and dues associated with Executive's involvement
with professional, industry, community, civic and charitable organizations,
provided that the Executive properly accounts for all such expenses in
accordance with Company policy.
(g) M.D.C. Executive Option Purchase Program.
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To the extent permitted by law, from time to time, Executive may borrow, and the
Company shall lend to Executive on the terms provided pursuant to the M.D.C.
Holdings, Inc. Executive Option Purchase Program, up to an aggregate of
$1,000,000 for the purpose of (i) exercising options to purchase the Company's
stock, and (ii) payment of any taxes payable by Executive arising from the
exercise of such options. The Executive Option Purchase Program shall be
extended beyond the expiration of the Employment Term, if necessary, to permit
Executive to borrow funds, to the extent permitted by law, for the purpose of
exercising any unexpired options and paying taxes arising from the exercise of
such options.
(h) Other Benefits Plans, Fringe Benefits and Vacations.
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The Executive shall be eligible to participate in each of the Company's present
employee benefit plans, policies or arrangements and any such plans, policies or
arrangements that the Company may maintain or establish during the Employment
Term and receive all fringe benefits and vacations for which his position makes
him eligible in accordance with the Company's policies and the terms and
provisions of such plans, policies or arrangements including, but not limited
to, the following:
(i) The Company shall provide the Executive with
a car allowance of $1,000 per month.
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(ii) The Company shall reimburse the Executive up
to $10,000 per year for theexpenses associated with the Executive's financial
planning and/or tax preparation services provided by independent outside
advisors or accountants.
(iii) The Company shall reimburse Executive for
monthly dues and assessments paid by Executive for one (1) golf or country club
designated by Executive, it being understood that Executive owns such
membership. Direct expenses associated with business functions at such club will
be reimbursed in accordance with the Company's standard procedures.
(iv) The Company shall reimburse Executive for
physical examinations to be conducted by a qualified medical physician of
Executive's choice, to a maximum amount of $3,000 annually.
(v) The Company shall provide to the Executive
(whether through insurance or otherwise) long-term disability benefits in an
amount such that the after-tax amount per year received by the Executive shall
be equal to the after-tax amount of the Executive's Base Salary in effect for
the year in which the Executive becomes disabled. Such disability benefit shall
be payable monthly, until the earlier of (1) the end of the Executive's
disability or (2) the Commencement Date of the Executive's Retirement Benefit.
(vi) The Company shall, to the fullest extent
permitted by Section 145 of the General Corporation Law of the State of
Delaware, as the same may be amended and supplemented, or by any successor
thereto, indemnify the Executive from and against any and all of the expenses,
liabilities or other matters referred to in or covered by said Section. The
Company shall advance expenses to the fullest extent permitted by said Section.
The Company shall cover the Executive under such insurance policies as the
Company may procure for executive liability and indemnification insurance, to
the same extent and providing limits of liability, deductibles and exclusions as
may be provided for the Company's Senior Executive Officers and outside
directors. These covenants shall survive termination of this Agreement for any
reason for a period of five years from the date of such termination.
(vii) Each calendar year during the Employment
Term, but without carryover from year to year (regardless of the Company's
general vacation policy), Executive shall be entitled to vacation of not less
than: four weeks if the Executive has been employed by the Company for less than
22 years; five weeks if the Executive has been employed by the Company for at
least 22 years but less than 25 years: and six weeks if the Executive has been
employed by the Company for at least 25 years.
The Company shall not terminate or change, in such a
way as to affect adversely the Executive's rights or reduce his benefits under
any Company benefit plan, policy or arrangement now in effect or which may
hereafter be established and in which the Executive is eligible to participate,
including, without limitation, the Executive Officer Performance Based
Compensation Plan, the Company's Equity Plans, the Retirement Benefit, life
insurance, medical and disability plans, unless such plan, policy or arrangement
is similarly
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terminated or changed with respect to all of the Company's other Senior
Executive Officers who are covered under such plan, policy or arrangement or who
have a similar plan, policy or arrangement with the Company; provided, however,
that the Company may not in any event reduce or terminate the Retirement Benefit
or change the Retirement Benefit in such a way as to adversely affect the
Executive's rights.
4. Termination.
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(a) Death and Disability.
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(i) The Executive's employment hereunder and the
Employment Term shall terminate upon his death or upon his becoming Totally
Disabled. For purposes of this Agreement, the Executive shall be "Totally
Disabled" if he is physically or mentally incapacitated so as to render him
incapable of performing his usual and customary duties as an executive for more
than 150 consecutive days. The Executive's receipt of Social Security disability
benefits shall be deemed conclusive evidence of Total Disability for purposes of
this Agreement; provided, however, that in the absence of his receipt of such
Social Security benefits, the Board of Directors of the Company may, in its
reasonable discretion, but based upon appropriate medical evidence, determine
that the Executive is Totally Disabled.
(ii) In the event of the Executive's death (while
Totally Disabled or otherwise) after his Retirement Benefit has commenced to be
paid, the Company shall continue to pay such Retirement Benefit to his
Beneficiary until five years after such commencement. If the Executive's
Retirement Benefit pursuant to Section 3(d) hereof has not commenced to be paid
on the date of his death, such benefit shall commence to be paid to his
Beneficiary on the first day of the month next following his date of death, as
if such payments had commenced at his Commencement Date and shall continue for
five years after his date of death. For purposes of this Agreement, the
Executive's "Beneficiary" shall be deemed to be his spouse; if his spouse
predeceases him (or if he is not married at the time of his death), his
Beneficiary shall be deemed to be his estate.
(iii) If Executive dies or becomes Totally
Disabled during the Employment Term, the Executive or his estate, as the case
may be, shall be entitled to receive all benefits earned under the Performance
Plans and Equity Plans as and for so long as provided in such plans.
(b) For Cause. The Executive's employment hereunder may
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be terminated for Cause. For purposes of this Agreement, the term "Cause" shall
mean: (i) the Executive's willful refusal to perform material duties reasonably
required or requested of him hereunder (other than as a result of total or
partial incapacity due to physical or mental illness) by the Board of Directors
for 30 days after having received written notice of such refusal from the Board
of Directors and having failed to commence to perform such duties within such
period, (ii) the Executive's commission of material acts of fraud, dishonesty or
misrepresentation in the performance of his duties hereunder, (iii) any final,
non-appealable conviction of Executive for an act or acts on the Executive's
part constituting a felony under the laws of the United States or any state
thereof which results or was intended to result directly or indirectly in gain
or personal enrichment by Executive at the expense of the Company, or (iv) any
material uncured breach of
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the provisions of Sections 5(a) and 5(b) hereof which continues for 30 days
after the Executive has received written notice of such breach. If the
Executive's employment is terminated for Cause, Executive shall be entitled only
to the amount of his Base Salary earned through the date of termination, and
shall not be entitled to any other amounts or benefits hereunder, including, but
not limited to, his Retirement Benefit, incentive compensation, or medical
insurance.
(c) Without Cause. If the Executive's employment
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hereunder is terminated without Cause (which shall include, without limitation,
the Company's election not to renew this Agreement pursuant to Section 2 hereof,
the Company's termination of the Performance Plans or the Company's amendment of
the Performance Plans to provide for payments to Executive in any calendar year
which are less than the amount calculated in accordance with Article III of the
Executive Officer Performance Plan adopted by the Company's shareholders on June
24, 1994, unless such termination or amendment similarly applies to all Senior
Executive Officers of the Company) as soon as practicable (but not later than 30
days) after such termination, he shall receive a lump sum cash payment equal to
the sum of: (i) if such termination occurs during the Employment Term, an amount
equal to the aggregate Base Salary earned by him during the three years prior to
such termination; and (ii) if such termination occurs during the Employment
Term, an amount equal to two hundred percent (200%) of the Annual Incentive
Compensation which the Executive was paid pursuant to Section 3(b) hereof for
the year prior to that in which such termination occurs. In addition, the
Company shall pay Executive the Retirement Benefit payable in accordance with
Section 3(d), commencing on the date of termination and the vesting of all
options, dividend equivalents and other rights granted to Executive under the
Equity Incentive Plans and any other Company plans shall be accelerated so as to
permit Executive fully to exercise all outstanding options and rights, if any,
granted to Executive during the Employment Term pursuant to such plans. The
Company shall also provide Executive and his spouse and dependents the medical
insurance benefits described in Section 3(c).
(d) Change in Control.
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(i) If a Change in Control Event (as defined in
Appendix A hereto) occurs, all options, dividend equivalents and other rights
granted to Executive under the Equity Incentive Plans and any other Company
plans shall be accelerated and shall become exercisable immediately prior to the
occurrence of the transaction giving rise to the Change in Control Event at
Executive's election, so as to permit Executive fully to exercise all
outstanding options and rights. In the event that such transaction fails to be
consummated, Executive's election pursuant hereto shall be of no effect and
Executive's options shall remain subject to the restrictions to which they were
originally subject.
(ii) If a Change in Control Event or a Material
Change (as defined in Appendix A hereto) occurs, the Executive shall, if he so
elects by written notice to the Company within two years after such Change in
Control Event or Material Change, be entitled to terminate his employment, if
not already terminated by the Company. In the event of either the Executive's
election hereunder to terminate his employment due to such Change in Control
Event or Material Change, or a termination of employment by the Company without
Cause upon or
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within two years following a Change in Control Event, then (A) the Executive
shall receive the amounts set forth in Section 4(c) above, and in either case,
as if the Company had terminated his employment without Cause; (B) the Executive
shall be entitled to the accelerated vesting of all options and rights as
provided in paragraph 4(d)(i) above and, at Executive's election, in the event
the Change in Control Event involves a two-tier tender offer, the Company will
pay Executive the difference between the exercise price of the otherwise
unvested options and the price offered in the first tier, or adjust the option
terms to provide Executive new options with an equivalent value; and (C) with
respect to the Retirement Benefit, either (1) the Company shall establish an
irrevocable grantor trust (hereinafter referred to as the "Rabbi Trust"), in
conformance with the model trust set forth in IRS Revenue Procedure 92-64, with
a national bank serving as trustee, and shall contribute to the Rabbi Trust an
amount equal to the actuarial present value (determined on the basis of the
applicable mortality table and applicable interest rate as specified in Section
417(e)(3) of the Internal Revenue Code as of the effective date of the
Executive's termination date) of the Retirement Benefit payments payable to the
Executive under Section 3(d), commencing on his termination date, or (2) the
Company shall, if it so elects, pay to the Executive, in a lump sum cash
payment, the amount that otherwise would be required to be contributed to the
Rabbi Trust, and any such lump sum cash payment to the Executive shall be in
complete discharge of the Company's obligation with respect to the Executive's
Retirement Benefit. Such contribution to the Rabbi Trust or such lump sum cash
payment to the Executive, as the case may be, shall be made within 30 days after
the Executive's election hereunder to terminate his employment or his
termination by the Company without Cause. If the Rabbi Trust is established, all
fees and expenses of the trustee of the Rabbi Trust, and any and all taxes
incurred on the income of the Rabbi Trust's assets, shall be paid by the Company
and shall not be charged against or paid by the Rabbi Trust.
(iii) Notwithstanding anything to the contrary
herein, if the aggregate amounts payable pursuant to subparagraph (ii) of this
paragraph (d), either alone or together with any other payments which the
Executive has the right to receive either directly or indirectly from the
Company or any of its affiliates, would be subject to an excise tax as an
"excess parachute payment" under Section 4999 of the Internal Revenue Code, the
Executive hereby agrees that such aggregate amounts payable hereunder shall be
paid in annual installments over the shortest period of time over which such
aggregate amounts may be paid and not be treated as "excess parachute payments"
under Section 4999. All determinations called for in this subparagraph (iii)
shall be made by Ernst & Young LLP or such other independent public accounting
firm with a national reputation as shall be selected by the Company. The Company
shall bear all costs associated with obtaining such determinations.
5. Covenants.
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(a) Confidentiality.
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The Executive agrees that, during or at any time after the Employment Term, he
shall not divulge, furnish or make accessible to any person, corporation,
partnership, trust or other organization or entity, any information, trade
secrets, technical data or know-how relating to the business, business
practices, methods, attorney-client communications, pending or contemplated
acquisitions or other transactions, products, processes, equipment or any
confidential or secret aspect of the business of the Company without the prior
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written consent of the Company, unless such information shall have become public
knowledge or shall have become known generally to competitors of the Company
through sources other than the Executive.
(b) Competitive Activity. Until the end of the
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Employment Term, and for a period of eighteen months beginning on (1) the last
day of the Employment Term or (2) a termination of the Executive's employment by
the Company for Cause, the Executive shall not, without the written consent of
the Board of Directors of the Company, directly or indirectly, knowingly engage
or be interested in (as owner, partner, shareholder, employee, director,
officer, agent, consultant or otherwise), with or without compensation, any
business whose principal activities are in competition with any substantial line
of business actively being conducted by the Company during the Employment Term
and such eighteen month period. Nothing herein, however, shall prohibit the
Executive from acquiring or holding not more than ten percent (10%) of any class
of publicly-traded securities of any such business.
(c) Remedy for Breach. The Executive acknowledges that
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the provisions of this Section 5 are reasonable and necessary for the protection
of the Company and that the Company will be irrevocably damaged if such
covenants are not specifically enforced. Accordingly, the Executive agrees that,
in addition to any other relief to which the Company may be entitled, the
Company shall be entitled to seek and obtain injunctive relief (without the
requirement of any bond) from a court of competent jurisdiction for the purposes
of restraining the Executive from any actual or threatened breach of such
covenants.
6. Miscellaneous.
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(a) Governing Law. This Agreement shall be governed by
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and construed in accordance with the laws of the State of Delaware applicable to
agreements made and to be performed in that State.
(b) Notices. Any notice, consent or other communication
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made or given in connection with this Agreement shall be in writing and shall be
deemed to have been duly given when delivered by United States registered or
certified mail, return receipt requested, to the parties at the following
addresses or at such other address as a party may specify by notice to the
other.
To the Executive:
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David D. Mandarich
c/o M.D.C. Holdings, Inc.
3600 South Yosemite Street, Suite 900
Denver, Colorado 80237
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To the Company:
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M.D.C. Holdings, Inc.
3600 South Yosemite Street, Suite 900
Denver, Colorado 80237
Attention: Michael Touff, General Counsel
(c) Entire Agreement; Construction; Amendment.
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This Agreement shall supersede any and all existing agreements between the
Executive and the Company or any of its affiliates or subsidiaries relating to
the terms of his employment. The parties acknowledge that options have been
granted to the Executive under the Equity Plans. Accordingly, to the extent the
provisions of this Agreement may conflict with the Equity Plans, the Equity
Plans shall control. To the extent the provisions of this Agreement may conflict
with provisions in any option agreement or option certificate between the
Executive and the Company, the provisions of this Agreement shall control. This
Agreement may not be amended except by a written agreement signed by both
parties.
(d) Waiver. The failure of a party to insist upon strict
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adherence to any term of this Agreement on any occasion shall not be considered
a waiver thereof or deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term of this Agreement.
(e) Assignment. Except as otherwise provided in this
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paragraph, this Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective heirs, representatives, successors and
assigns. This Agreement shall not be assignable by the Executive, and shall be
assignable by the Company only to any corporation or other entity resulting from
the reorganization, merger or consolidation of the Company with any other
corporation or entity or any corporation or entity to which the Company may sell
all or substantially all of its assets, and it must be so assigned by the
Company to, and accepted as binding upon it, by such other corporation or entity
in connection with any such reorganization, merger, consolidation or sale.
(f) Litigation Costs. In the event that the Executive
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shall successfully prosecute a proceeding to enforce any provision of this
Agreement, in addition to any other relief awarded the Executive in such action,
the parties agree that the decision rendered shall award the Executive all of
his attorneys' fees, disbursements and other costs incurred by the Executive in
prosecuting such case.
(g) Severability. If any provision of this Agreement
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is invalid or unenforceable, the balance of the Agreement shall remain in
effect, and if any provision is inapplicable to any person or circumstance, it
shall nevertheless remain applicable to all other persons and circumstances.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, including Appendix A hereto, as evidence of their adoption as of the
dates set forth above.
M.D.C. HOLDINGS, INC.
By: /s/ Paris G. Reece III
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Name: Paris G. Reece III
Title: Executive Vice President
EXECUTIVE
/s/ David D. Mandarich
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Name: David D. Mandarich
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APPENDIX A
This Appendix A is attached to and shall form a part of the
Employment Agreement (the "Agreement"), dated as of October 1, 1997, and
restated as of February 26, 2003, by and between M.D.C. HOLDINGS, INC. (the
"Company"), and DAVID D. MANDARICH (the "Executive").
(a) For purposes of the Agreement, a "Change in Control Event"
shall occur if:
(i) a report on Schedule 13D is filed with the
Securities and Exchange Commission pursuant to Section 13(d) of the Securities
Exchange Act of 1934 (the "Exchange Act") disclosing that any person (within the
meaning of Section 13(d) of the Exchange Act), other than the Company (or one of
its subsidiaries) or any employee benefit plan sponsored by the Company (or one
of its subsidiaries), or any director of the Company as of the date of the
Agreement or affiliate of such director, is the beneficial owner, directly or
indirectly, of twenty percent (20%) or more of the combined voting power of the
then-outstanding securities of the Company;
(ii) any person (within the meaning of Section 13(d) of
the Exchange Act), other than the Company (or one of its subsidiaries) or any
employee benefit plan sponsored by the Company (or one of its subsidiaries), or
any director of the Company as of the date of the Agreement or affiliate of such
director, shall purchase securities pursuant to a tender offer or exchange offer
to acquire any common stock of the Company (or securities convertible into
common stock) for cash, securities or any other consideration, provided that
after consummation of the offer, the person in question is the beneficial owner
(as such term is defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of twenty percent (20%) or more of the combined voting power of the
then outstanding securities of the Company (as determined under paragraph (d) of
Rule 13d-3 under the Exchange Act, in the case of rights to acquire common
stock);
(iii) the stockholders of the Company shall approve:
(A) any consolidation or merger of the Company (1) in which the Company is not
the continuing or surviving corporation; or (2) pursuant to which shares of
common stock of the Company would be converted into cash, securities or other
property; or: (B) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially all the
assets of the Company; or
(iv) there shall have been a change in a majority of the
members of the Board of Directors of the Company within a twelve month period,
unless the election or nomination for election by the Company's stockholders of
each new director during such twelve month period was approved by the vote of
two-thirds of the directors then still in office who were directors at the
beginning of such twelve month period.
(b) For purposes of the Agreement, a "Material Change" shall
occur if:
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(i) the Company makes any change in the Executive's
functions, duties or responsibilities from the positions that the Executive
occupied on October 1, 1997 or, if the Agreement has been renewed or extended,
the date of the last renewal or extension, but only if such change would cause:
(A) the Executive to report to anyone other
than the Chief Executive Officer or Board of Directors of the Company,
(B) the Executive to no longer be the
President and Chief Operating Officer of the Company or its successor,
(C) even if the Executive maintains the
positions of President and Chief Operating Officer, his responsibilities to be
reduced (without his written permission) from those in effect on October 1, 1997
or the date of the last renewal or extension of the Agreement, as applicable, or
(D) the Executive's position with the
Company to become one of lesser importance or scope;
(ii) the Company assigns or reassigns the Executive
(without his written permission) to another place of employment;
(iii) the Company reduces the Executive's Base Salary,
annual or long-term incentive compensation or the manner in which such
compensation is determined, or retirement benefits, unless such reduction
similarly applies to all Senior Executive Officers of the Company, as defined in
the Agreement, or the Company breaches the terms of the Agreement; provided,
however, that nothing in this clause (iii) shall be construed to permit the
Company to reduce the Executive's Retirement Benefit, as defined in the
Agreement, in any event, and regardless of whether such reduction would
similarly apply to all Senior Executive Officers of the Company; or
(iv) a purchaser of all or substantially all of the
Company's assets or any successor or assignee of the Company fails to assume
the Agreement.
M.D.C. HOLDINGS, INC.
By: /s/ Paris G. Reece III
----------------------------------
Name: Paris G. Reece III
Title: Executive Vice President
EXECUTIVE
/s/ David D. Mandarich
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Name: David D. Mandarich
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