AGREEMENT, dated
as of October 1, 1997, previously restated as of
February 26, 2003, and hereby further restated to be effective
as of August 1, 2008, by and between M.D.C. Holdings, Inc.
(the “Company”), and Larry A. Mizel (the
“Executive”).
WHEREAS, the
Executive has served the Company in various capacities for over
thirty-five 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
Chairman of the Board and Chief Executive 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 (subject to Section 6(b) below) 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 August 1, 2008 and shall continue through
December 31, 2010 (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 $1,000,000 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.
(b)
Annual Incentive Compensation . For calendar year 2008 and
the remainder of the Employment Term, Executive will continue to
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
continue to 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. The present Retirement
Benefit in which the Executive is vested as of the date of this
Agreement is a benefit for life equal to $700,000 per year. Upon
completion of service at the conclusion of the Initial Term, the
Retirement Benefit shall be increased to a benefit for life equal
to $1,000,000 per year, and the amount of the annual benefit for
life shall be increased with the completion of each succeeding
Additional Term by $333,333.33 up to an aggregate amount of annual
lifetime benefit not to exceed $2,000,000 per year. Except as
otherwise expressly provided in Section 4, the Retirement
Benefit shall be paid in equal monthly installments commencing on
the first day of the month following the Executive’s
retirement from the Company (the “Commencement Date”)
and shall continue for the duration of Executive’s lifetime.
Retirement shall occur at the time the Executive has a separation
from service with the Company consistent with the provisions for
separation from service contained in Treas. Reg. §
1.409A-1(h). Notwithstanding the preceding or any other provision
of this Agreement to the contrary, the Retirement Benefit shall be
$2,000,000 per year in the event the Executive’s employment
is terminated prior to the expiration of the Initial Term or each
Additional Term pursuant to (1) the Executive’s death
(in which event the provisions of Section 4(a)(ii) regarding
payment to a Beneficiary shall apply) or his becoming Totally
Disabled in accordance with Section 4(a), (2) a
termination by the Company without Cause in accordance with Section
4(c) or (3) the Executive’s election to terminate his
employment in accordance with Section 4(d), provided that such
termination results in a separation from service with the Company
consistent with the provisions for separation from service
contained in Treas. Reg. § 1.409A-1(h).
(e)
Medical Insurance Benefits . During the Employment Term and
for the duration of Executive’s lifetime after the
Commencement Date, 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
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to that
provided to the Executive at the time of execution of this
Agreement. In addition such medical insurance shall provide
comparable coverage for the Executive’s spouse for the
duration of Executive’s life and if she survives him for an
additional sixty months after Executive’s death.
(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)
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 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 prior to
his becoming Totally Disabled or (2) the Commencement Date of
the Executive’s Retirement Benefit.
(ii) 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. (For purposes of this
Agreement, the “Senior Executive Officers” of the
Company shall be the four officers of the Company having the
highest annual base salaries.) These covenants shall survive
termination of this Agreement for any reason for a period of five
years from the date of such termination.
(iii) Each
calendar year during the Employment Term, but without carryover
from year to year (regardless of the Company’s general
vacation policy), the Executive shall be entitled to vacation of
not less than six weeks. The Executive hereby waives any right to
vacation days accrued by the Executive prior to January 1,
2000, and agrees that, in lieu thereof, Executive will receive
payment in the amount of $418,846 no later than December 31,
2008. This amount shall be subject to appropriate withholding
taxes.
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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.
(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 a period expected to last
not less than 12 consecutive months during which he receives income
replacement benefits from an employer-provided health and accident
plan for at least twelve months. 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
as provided in Treas. Reg. § 1.409A-3(i)(4).
(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 r
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