EXHIBIT 10.23
CHANGE IN CONTROL AGREEMENT
OF
XXXXXXXX X. XXXXXXX
This Change in Control Agreement (the "Agreement") between The Rottlund
Company, Inc., a Minnesota corporation (the "Company"), and XXXXXXXX X. XXXXXXX
(the "Executive") is effective February 1, 1999.
WHEREAS, it is in the best interests of the Company and its stockholders
to retain the services of the Executive in the event of a threat or occurrence
of a Change in Control and to ensure his continued dedication and efforts in
such event without undue concern for his personal financial and employment
security; and
WHEREAS, in order to induce the Executive to remain in the employ of the
Company, particularly in the event of a threat or the occurrence of a Change in
Control, the Company desires to enter into this Agreement with the Executive to
provide the Executive with certain benefits if a Change in Control occurs;
NOW, THEREFORE, in consideration of the foregoing premises and the
covenants contained herein, the parties hereby agree as follows:
1. TERM OF AGREEMENT. Subject to the conditions set forth in Section
4, this Agreement shall continue in effect until January 31, 2000, unless a
Change in Control occurs on or prior to January 31, 2000, in which case this
Agreement shall continue in effect for six months after the closing of the
transaction constituting a Change in Control.
2. DEFINITIONS.
2.1 GOOD CAUSE. For purposes of this Agreement, "Good Cause"
means: (a) the conviction of the Executive, by a court of competent
jurisdiction, of a felony committed by the executive during the term of this
Agreement; (b) the written confession by the Executive of a felony committed
during the term of this Agreement; or (c) the conviction of or written
confession by the Executive to the embezzlement or misappropriation of funds of
the Company, which embezzlement or misappropriation was committed by the
Executive during the term of this Agreement.
2.2 CHANGE IN CONTROL. A "Change in Control" will occur under
this Agreement if 50% or more of the stock or assets of the Company is acquired
by a third party on or before January 31, 2000, or if the families of Xxxxxxx
Xxxxxx and Xxxxx Xxxxxx (including all common stock held by Xxxxxxx Xxx Xxxxxx)
do not collectively own (either directly or beneficially) in excess of 50% of
the voting capital stock of the Company during this same time
period. For purposes of this Agreement, a Change in Control will be deemed to
have occurred on the date a Sale Agreement is executed by all parties to the
transaction.
2.3 DISABILITY. The Executive shall be deemed to have become
"Disabled," for purposes of this Agreement, in the event that he cannot, because
of illness, injury, or incapacity, render any services of the character
contemplated by this Agreement over a continuous period of 120 days.
2.4 CONSTRUCTIVE DISCHARGE. A "Constructive Discharge" will be
deemed to have occurred if, after a Change in Control: (1) the Company assigns
the Executive a position, duties, responsibilities or status that are
inconsistent with the Executive's position, duties, responsibilities and/or
status immediately prior to the Change in Control; (2) there is a change in the
titles or offices the Executive held immediately prior to the Change in Control;
(3) the Company relocates the Executive to a location that is more than fifty
(50) miles from the Company's current headquarters in Roseville, Minnesota; (4)
the Company reduces the Executive's base salary or fails to pay the Executive
any compensation or benefits to which the Executive are entitled within ten (10)
days of the date due; or (5) the Company breaches any of its obligations under
this Agreement.
2.5. SUCCESSORS AND ASSIGNS. For purposes of this Agreement,
"Successors and Assigns" shall mean a corporation or other entity acquiring all
or substantially all the stock, assets, and/or business of the Company
(including this Agreement) whether by agreement, operation of law, or otherwise.
3. COMPENSATION UPON CHANGE IN CONTROL. If a Change in Control
occurs, the Company will pay the Executive a bonus of $125,000 six months after
the closing of the transaction constituting a Change in Control occurs, subject
to fulfillment of all the conditions described in Section 4.
4. CONDITIONS PRECEDENT TO PAYMENT OF BONUS. Payment of the bonus
under Section 3 is contingent on the Executive satisfying all of the following
conditions: (i) the Executive participates enthusiastically in any process to
sell the Company or substantially all of its assets; (ii) the Executive does not
voluntarily resign his employment (absent a Constructive Discharge) for six
months after the closing of the transaction constituting a Change in Control;
(iii) the Executive does not have his employment terminated for Good Cause;
(iv) the Executive keeps confidential all information relating to any sale
process (this confidentiality obligation means, among other things, that the
Executive will not discuss the amount or existence of the Executive's bonus
under this Agreement or any amounts payable under his Employment Agreement with
any other employee of the Company, other than Xxx Xxxxxx or Xxxxx Xxxxxx); and
(v) the Executive: (A) at or immediately before the signing of any definitive
purchase and sale agreement relating to the Change in Control (the "Sale
Agreement") and at or immediately before the closing of such Change in Control
transaction, delivers a certificate to the Company and its shareholders
certifying to the best of the Executive's knowledge that the representations and
warranties relating to the Company made in the Sale Agreement are true and
correct in all material respects on and as of the date of execution of the Sale
Agreement and on and as of such
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closing with the same force and effect as though made on and as of such closing
or, if the Executive has knowledge that such representations and warranties are
not true and correct in all material respects at the relevant times, certifying
to the best of the Executive's knowledge in which respects such representations
and warranties are not true and correct; and (B) at or immediately before such
closing delivers a certificate to the Company and its shareholders certifying to
the best of the Executive's knowledge that the Company has performed in all
material respects all of the covenants contained in the Sale Agreement required
to be performed by the Company by the time of such closing, or if the Executive
has knowledge that the Company has not performed such covenants in all material
respects by the time of such closing, certifying to the best of the Executive's
knowledge in which respects such covenants have not been performed.
5. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of the Company, its Successors and Assigns, and the
Company shall require any Successors and Assigns to expressly assume and agree
to perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession or assignment had
taken place. Neither this Agreement nor any right or interest thereunder shall
be assignable or transferable by the Executive, his beneficiaries or legal
representatives, except by will or by the laws of descent and distribution.
This Agreement shall inure to the benefit of and be enforceable by the
Executive's legal personal representative.
6. NOTICES. For purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, to the recipient at
the address indicated below:
To the Company:
The Rottlund Company, Inc.
0000 Xxxx Xxxx Xxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: __________________
To the Executive:
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or such other address or to the attention of such other persons as the recipient
party shall have specified by prior written notice to the sending party.
7. WAIVER. No provision of this Agreement may be modified, waived,
or discharged unless such modification, waiver, or discharge is agreed to in
writing and signed by the Executive and the Company. No waiver by either party
hereto at any time of any breach by the
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other party hereto or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
8. GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Minnesota without
giving effect to the conflict of laws principles thereof. Any action brought by
any party to this Agreement shall be brought and maintained in a court of
competent jurisdiction in Hennepin County in the State of Minnesota.
9. SEVERABILITY. To the extent any provision of this Agreement shall
be invalid or unenforceable, it shall be considered deleted from this Agreement
and the remainder of such provision and of this Agreement shall be unaffected
and shall continue in full force and effect. The Executive acknowledges the
uncertainty of the law in this respect and expressly stipulates that this
Agreement be given the construction which renders its provisions valid and
enforceable to the maximum extent (not exceeding its express terms) possible
under applicable law.
10. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreements, if any,
understandings, and arrangements, oral or written, between the parties hereto
with respect to the subject matter covered by this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the day and year first above written.
THE COMPANY:
THE ROTTLUND COMPANY, INC.
By /s/ Xxxxxxx X. Xxxxxx
Chairman of the Board
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THE EXECUTIVE:
By /s/ Xxxxxxxx X. Xxxxxxx
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