EMPLOYMENT AGREEMENT
AGREEMENT, dated as of October 1, 1997, 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
Executive, and the Executive shall be employed by the Company, as Executive
Vice President-Real Estate 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 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.
(a) BASE SALARY. During each calendar year of 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 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 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 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 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 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. 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 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. 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 the expenses 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.
(a) DEATH AND DISABILITY.
(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 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 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 one hundred percent (100%) 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.
(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 the 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 Price Waterhouse, L.L.P. 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.
(a) CONFIDENTIALITY. 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 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 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.
(a) GOVERNING LAW. This Agreement shall be governed by 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 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:
David D. Mandarich
c/o M.D.C. Holdings, Inc.
3600 South Yosemite Street, Suite 900
Denver, Colorado 80237
with a copy to
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David D. Mandarich
5 Cherry Hills Farm Court
Englewood, Colorado 80110-7100
TO THE COMPANY:
M.D.C. Holdings, Inc.
3600 South Yosemite Street, Suite 900
Denver, Colorado 80237
Attention: Michael Touff, General Counsel
(c) ENTIRE AGREEMENT; AMENDMENT. 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. It may not be amended except by a written agreement signed by
both parties.
(d) WAIVER. The failure of a party to insist upon strict
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
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 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 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 this
21st day of October, 1997.
M.D.C. HOLDINGS, INC.
By: /s/ Paris G. Reece IV
------------------------------------------
Name: Paris G. Reece IV
----------------------------------------
Title: Senior Vice President
---------------------------------------
EXECUTIVE
/s/ David D. Mandarich
----------------------------------------------
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, 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
President and Chief Executive Officer or the Board of Directors of the
Company,
(B) the Executive to no longer be the Executive Vice
President-Real Estate and Chief Operating Officer of the Company or its
successor,
(C) even if the Executive maintains the positions of
Executive Vice President-Real Estate 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 IV
--------------------------------
Name: Paris G. Reece IV
------------------------------
Title: Senior Vice President
-----------------------------
EXECUTIVE
/s/ David D. Mandarich
-------------------------------------
Name: David D. Mandarich
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