-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, QZaM6KLpEfJaHnmMnvY0V/CrnCsy14TY1tFjySveIf2icWB5KA/gnrLgwy6+ZIll atHsSd9bq0uDUV185t+nfA== 0000912057-94-002227.txt : 19940705 0000912057-94-002227.hdr.sgml : 19940705 ACCESSION NUMBER: 0000912057-94-002227 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 19940701 EFFECTIVENESS DATE: 19940720 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MDC HOLDINGS INC CENTRAL INDEX KEY: 0000773141 STANDARD INDUSTRIAL CLASSIFICATION: 1531 IRS NUMBER: 840622967 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 SEC ACT: 1933 Act SEC FILE NUMBER: 033-54429 FILM NUMBER: 94537630 BUSINESS ADDRESS: STREET 1: 3600 S YOSEMITE ST STE 900 CITY: DENVER STATE: CO ZIP: 80237 BUSINESS PHONE: 3037731100 S-8 1 S-8 As filed with the Securities and Exchange Commission on July 1, 1994 Registration No. ______________ ________________________________________________________________________________ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------------------------- FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 M.D.C. HOLDINGS, INC. -------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 84-0622967 - -------------------------------- -------------------- (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 3600 South Yosemite Street, Suite 900, Denver, Colorado 80237 ------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) M.D.C. HOLDINGS, INC. EMPLOYEE EQUITY INCENTIVE PLAN M.D.C. HOLDINGS, INC. DIRECTOR EQUITY INCENTIVE PLAN AND CERTAIN NON-STATUTORY STOCK OPTIONS ----------------------------------- (Full Title of the Plan) Spencer I. Browne, President M.D.C. Holdings, Inc. 3600 South Yosemite Street, Suite 900 Denver, Colorado 80237 ------------------------------------------- (Name and address of agent for service) (303)773-1100 --------------------------------------------------------------- (Telephone number, including area code, of agent for service) Copy to: Daniel S. Japha, Esq. Paris G. Reece III General Counsel - Corporate Vice President and M.D.C. Holdings, Inc. Chief Financial Officer 3600 South Yosemite Street M.D.C. Holdings, Inc. Suite 900 3600 South Yosemite Street Denver, Colorado 80237 Suite 900 Denver, Colorado 80237 ---------------------------- The Exhibit Index may be found on Page 32 of the sequentially numbered copy of this Registration Statement. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------- Proposed Proposed Maximum Maximum Title of Amount Offering Aggregate Amount of Securities to to be Price Per Offering Registration be Registered Registered Share (1) Price (1) Fee - ------------- ---------- --------- --------- ------------ Common Stock 2,904,000 $5.6875 $16,516,500 $5,161.41 $0.01 par value(2) Shares - -------------------------------------------------------------------------------- Common Stock 250,000 $5.6875 $ 1,421,875 $ 444.34 $0.01 par value(3) Shares - -------------------------------------------------------------------------------- Total 3,154,000 XXX $17,938,375 $5,605.75 Shares - -------------------------------------------------------------------------------- (1) The calculation of the registration fee is based upon the average of the closing high and low sales prices of M.D.C. Holdings, Inc.'s (the "Company") common stock as quoted by the New York Stock Exchange on June 24, 1994. (2) Issuable upon exercise of Incentive Stock Options and Non-Statutory Options pursuant to the Company's Employee Equity Incentive Plan and Director Equity Incentive Plan. (3) Issuable upon exercise of a Non-Qualified Stock Option pursuant to the Non-Qualified Stock Option Agreement, as amended. - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
PROSPECTUS M.D.C. HOLDINGS, INC. COMMON STOCK, $.01 PAR VALUE 1,445,000 Shares of Common Stock Acquired Under the M.D.C. Holdings, Inc. Employee Equity Incentive Plan, the M.D.C. Holdings, Inc. Director Equity Incentive Plan and Certain Non-Statutory Stock Options This Prospectus relates to the resale by certain employees, officers and directors (hereafter sometimes referred to collectively as the "Selling Stockholders" and individually as a "Selling Stockholder") of M.D.C. Holdings, Inc., a Delaware corporation (the "Company"), of shares of the Company's Common Stock, $.01 par value, acquired, or which may be acquired in the future, pursuant to the Company's Employee Equity Incentive Plan and Director Equity Incentive Plan or pursuant to a Non-Statutory Stock Option granted in connection with the employment of a consultant who is currently an employee of the Company (the "Shares"). The Company will not receive any proceeds from the sale of the Shares by the Selling Stockholders. The Common Stock of the Company is traded on the New York Stock Exchange ("NYSE") and the Pacific Stock Exchange ("PSE") where prices are reported under the symbol "MDC." On June 24, 1994, the last reported sale price for the Common Stock on the NYSE was $5.875 per share. All expenses relating to the distribution of the shares are to be borne by the Company, other than commissions, concessions and discounts of underwriters, dealers or agents of the Selling Stockholders. See "Risk Factors" for a description of certain risks involved in the purchase of the Shares. --------------- 1 THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. --------------- The Selling Stockholders directly or through agents, dealers or underwriters may sell the Shares from time to time on terms to be determined at the time of sale. The aggregate proceeds to the Selling Stockholders from the sale of the Shares sold by them pursuant to this Prospectus will be the purchase price of such Shares less any commissions. See "Plan of Distribution." Each of the Selling Stockholders reserves the sole right to accept or to reject, in whole or in part, any proposed purchase of its Shares. The Selling Stockholders, and any underwriters, dealers or agents that participate with the Selling Stockholders in the distribution of the Shares, may be deemed to be "underwriters" within the meaning of the Securities Act of 1933, as amended (the "Securities Act") , and any commissions received by them and any profit on the resale of the Shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. See "Plan of Distribution" for indemnification arrangements between the Company and the Selling Stockholders. --------------- The date of this Prospectus is July 1, 1994 2 AVAILABLE INFORMATION The Company has filed with the Securities and Exchange Commission (the "Commission") a Registration Statement on Form S-8 under the Securities Act, with respect to the Shares offered hereby. For the purposes hereof, the term "Registration Statement" means the original Registration Statement and any and all amendments thereto. This Prospectus does not contain all of the information set forth in the Registration Statement and the schedules and exhibits thereto, to which reference hereby is made. Each statement made in this Prospectus concerning a document filed as an exhibit to the Registration Statement is qualified in its entirety by reference to such exhibit for a complete statement of its provisions. The Company is subject to the informational reporting requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance therewith, files reports, proxy statements and other information with the Commission. Such reports, proxy statements and other information can be inspected, without charge, at the public reference facilities of the Commission at its principal office at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at its regional office at 500 W. Madison Street, Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center, 13th Floor, New York, New York 10007. Any interested party may obtain copies of such materials at prescribed rates from the Public Reference Section of the Commission at its principal office at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549. In addition, such material can be inspected at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York and the Pacific Stock Exchange, 115 Sansome Street, Suite 1104, San Francisco, California. PROSPECTUS SUMMARY THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED INFORMATION AND FINANCIAL STATEMENTS (INCLUDING THE NOTES THERETO) APPEARING ELSEWHERE OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS. REFERENCES HEREIN TO "MDC" OR THE "COMPANY," UNLESS OTHERWISE INDICATED, REFER TO M.D.C. HOLDINGS, INC. AND ITS SUBSIDIARIES. 3 THE COMPANY The Company is a national home builder with major operations in Colorado, northern Virginia and suburban Maryland (collectively "Mid-Atlantic")and northern California, and smaller operations in Arizona, Nevada and southern California. Principally through HomeAmerican Mortgage Corporation ("HomeAmerican"), a wholly-owned subsidiary, the Company originates mortgage loans for its home buyers and for others. HomeAmerican also purchases loans originated by unaffiliated loan correspondents. To a substantially lesser extent, the Company owns and manages portfolios of mortgage-related assets. In its home building segment, the Company's strategy is to build quality homes at affordable prices. The Company, as the general contractor, supervises the development and construction of all of its projects and employs subcontractors for site development and home construction. The Company emphasizes the building of single-family homes generally for the first-time and move-up buyer. Homes are constructed according to basic designs based on customer preferences in the location in which they are built. Single-family homes are built and sold by the Company's subsidiaries using the name Richmond American Homes and Richmond Homes. HomeAmerican is a Federal Housing Administration, Veterans Administration, Federal National Mortgage Association and Federal Home Loan Mortgage Corporation authorized mortgage loan originator. Substantially all of the mortgage loans originated by HomeAmerican are sold to private investors. HomeAmerican initially retains the right to service these mortgage loans selling the servicing at a later date, usually in bulk. The Company's asset management operations (collectively, the "asset management segment"), among other things, enable MDC to (i) manage the day-to- day operations of two national securities exchange-listed real estate investment trusts; (ii) own interests ("CMO" Ownership Interests") in issuances of collateralized mortgage obligations ("CMO bonds"); and (iii) own interests in various other investments. The Company currently does not expect to acquire additional CMO Ownership Interests in the future, except to the extent attractive opportunities may be identified. As a result, future income from the asset management segment primarily will be dependent on management fees. 4 The Company is a Delaware corporation originally incorporated in Colorado in 1972. The principal executive offices of the Company are located at 3600 South Yosemite Street, Suite 900, Denver, Colorado 80237, and its telephone number is (303)773-1100. RISK FACTORS See "Rick Factors" for a discussion of certain risks involved in the purchase of the Shares. THE OFFERING Shares offered hereby .... Up to 1,445,000 shares of the Company's Common Stock, $.01 par value per share. Trading .................. The Common Stock of the Company is traded on the NYSE and the PSE where prices are reported under the symbol "MDC." SUMMARY CONSOLIDATED FINANCIAL INFORMATION (DOLLARS IN THOUSANDS)
THREE MONTHS ENDED March 31, Year Ended December 31, ------------------ --------------------------------------------------------- 1994 1993 1993 1992 1991 1990 1989 ------ ------ ------ ------ ------ ------ ------ INCOME STATEMENT DATA: Revenues . . . . . . . $168,693 $115,885 $652,076 $511,568 $422,232 $512,695 $724,075 Income (loss) from continuing operations . . . . . . 3,806 915 10,056 4,765 (12,903) (11,954) (90,091) Income (loss) from continuing operations per primary common share. . . . . . . . . $ .19 $ .04 $ .45 $ .22 $ (.62) $ (.63) $ (5.66)
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March 31, December 31, ----------------------------------------------------------- 1994 1993 1992 1991 1990 1989 ------ ------ ------ ------ ------ ------ BALANCE SHEET DATA: Total assets . . . . . . . $733,224 $776,866 $858,944 $1,316,793 $1,477,146 $1,663,726 Total Debt(1). . . . . . . 329,570 345,676 325,835 350,776 411,291 515,179 Stockholders' equity . . . 178,270 175,854 164,182 160,488 157,261 150,474 - ------------- (1) Excludes CMO bond indebtedness.
RISK FACTORS Prospective investors should carefully consider the following factors in addition to the other information set forth in this Prospectus before making an investment in the Shares offered hereby. LEVERAGE The home building industry is capital intensive. The Company finances a substantial portion of its land acquisition and residential construction activities through the incurrence by its subsidiaries of secured indebtedness and, as a result, the Company is highly leveraged. As of March 31, 1994, the Company's total indebtedness (excluding CMO bond indebtedness) was $329,570,000 and the Company's debt-to-equity ratio was approximately 1.85 to 1. In addition, agreements governing certain indebtedness permit the Company to incur significant additional indebtedness. Although the Company expects to generate sufficient cash flow from operations to meet its debt service obligations, the ability of the Company to meet its obligations will depend upon the future performance of the Company and will be subject to financial, business and other factors affecting the business and operations of the Company, including general economic conditions. HOLDING COMPANY ISSUER Most of the operations of the Company are conducted through, and most of the Company's assets are held by, its subsidiaries, 6 and, therefore, the Company is dependent on the cash flow of its subsidiaries to meet its debt obligations. Except to the extent the Company may itself be a creditor with recognized claims against its subsidiaries, all claims of creditors and holders of preferred stock of the subsidiaries will have priority with respect to the assets of such subsidiaries over the claims of creditors and equity holders of the Company. At March 31, 1994, the Company's subsidiaries had $181,268,000 aggregate principal amount of indebtedness and liquidation preference of preferred stock outstanding. Instruments governing certain indebtedness of the Company's subsidiaries contain restrictions on transfer of funds from such subsidiaries to the Company. THE HOME BUILDING INDUSTRY The home building industry is affected significantly by changes in economic conditions, the supply of homes, changes in governmental regulation (including uncertainties involving the entitlement process in the improvement of undeveloped land), increases in real estate taxes, energy costs and costs of materials and labor, the availability and cost of suitable land, environmental factors, weather and the availability of financing at rates and on terms acceptable to home builders and home buyers. Beginning in 1992 through October 1993, home mortgage interest rates declined to their lowest levels in 25 years to an average of 6.7% on a 30-year, fixed-rate mortgage. From October 1993 to May 1994, these rates have increased to as high as 9%. Increases in mortgage interest rates adversely affect the Company's home building and mortgage lending segments. Higher mortgage interest rates (i) may reduce the demand for homes and home mortgages; and (ii) generally will reduce home mortgage refinancing activity. With the recent increases in mortgage interest rates relative to levels in 1993, the Company, consistent with the rest of the industry in general, has experienced a major decline in refinancing activity in its mortgage lending operations. These events have affected adversely the spot mortgage loan originations and the amount of mortgage loans purchased through correspondents by the Company's mortgage lending segment, although increased originations from the Company's home building operations have offset to a significant degree these declines. The Company is unable to predict the extent to which current or future increases in mortgage interest rates will adversely affect the Company's operating activities and results of operations. 7 The housing industry is cyclical and significantly is affected by prevailing economic conditions. The Company's business and earnings are dependent in large part on its Colorado and Mid-Atlantic markets. The Colorado market was affected adversely beginning in 1986 through 1991 by weaknesses in the state economy as well as by weaknesses in the housing industry in this market. The Company experienced an increase in the number of new contracts for the purchase of homes in Colorado beginning in 1991 which has continued through March 31, 1994. There can be no assurance that the Company will be able to maintain or increase this level of new sales contracts or deliver an increasing number of homes in the future in its Colorado market. From late 1988 through 1990, the Company's Mid-Atlantic market was affected adversely by weaknesses in the housing industry in this market. The Company experienced an increase in the number of new contracts for the purchase of homes in its Mid-Atlantic market in 1991 which has continued through March 31, 1994, primarily due to (i) moderate growth in the region's economy; (ii) an increase in the total number of subdivisions in which the Company is operating; and (iii) the reduction in mortgage interest rates which began in 1991 and continued through October 1993. There can be no assurance that the Company will be able to maintain or increase this level of new sales contracts or deliver an increasing number of homes in the future in its Mid-Atlantic market. The adoption, in August 1989, of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA"), as well as the national "credit crunch" that commenced in mid-1989, and the enactment in August 1991 of the Federal Deposit Insurance Corporation Improvements Act of 1991, affected adversely the ability of home builders to acquire and develop land into finished sites for homes. FIRREA, among other things, has reduced the amount of resources thrifts allocate to acquisition, development and construction loans, which has affected, and in the future may affect, adversely the Company's ability to acquire and develop new properties and develop its current land inventory into finished sites suitable for the construction of homes. REGULATORY AND ENVIRONMENTAL FACTORS The Company is subject to continuing compliance with various federal, state and local statutes, ordinances, rules and regulations, including, among others, environmental, zoning and 8 land use ordinances, building, plumbing and electrical codes, contractors' licensing laws and health and safety regulations and laws. Various localities in which the Company operates have imposed (or may in the future impose) fees on developers to fund, among other things, schools, road improvements and low and moderate income housing. From time to time, various municipalities in which the Company operates, particularly in California and Nevada, restrict or place moratoriums on the availability of water and sewer taps. Additionally, certain jurisdictions in which the Company operates (particularly in California) have proposed or enacted growth initiatives restricting the number of building permits available in any given year. Although no assurance can be given as to future conditions or future governmental action, in general, the Company believes that it has, or under existing agreements and regulations ultimately can obtain, an adequate number of water and sewer taps and building permits for its inventory of land and land held for development. The Company's general policy is to acquire finished building sites and land for development only in areas which have, or will have upon completion of development, the availability of building permits, access to utilities and other municipal service facilities necessary for anticipated development requirements. Generally, the zoning of land is suitable for its intended use when acquired. The home building operations of the Company also are affected by environmental considerations pertaining to, among other things, availability of water, municipal sewage treatment capacity, land use, hazardous waste disposal, naturally occurring radioactive materials, building materials, population density and preservation of the natural terrain and vegetation (collectively, "Environmental Laws"). The particular Environmental Laws which apply to any given home building project vary greatly according to the site's location, environment conditions and present and former uses. These Environmental Laws may result in delays, may cause the Company to incur substantial compliance and other costs and may prohibit or severely restrict home building activity in certain environmentally-sensitive regions or areas. COMPETITION The real estate industry is fragmented and highly competitive. 9 In each of its markets, the Company competes with numerous home builders, subdivision developers and land development companies (a number of which build nationwide). Home builders not only compete for customers, but also for, among other things, desirable financing, raw materials and skilled labor. In a number of its markets, the Company competes with home builders that are substantially larger and have greater financial resources than the Company. Competition for home sales is based, among other factors, on price, style, financing provided to prospective purchasers, location, quality, warranty service and general reputation in the community. The mortgage industry is fragmented and highly competitive. In each of the areas in which it originates loans, HomeAmerican competes with numerous banks, thrifts and mortgage bankers, many of which are larger and have greater financial resources than HomeAmerican. Competition is based, among other factors, on pricing, loan terms and underwriting criteria. AFFILIATED TRANSACTIONS The Company has entered into several transactions with affiliates, including Larry A. Mizel, the Company's Chairman of the Board of Directors and Chief Executive Officer, David D. Mandarich, Executive Vice President-Real Estate and a director of the Company, and other members of the Board of Directors. Material transactions between the Company and its officers and directors are subject to review by the Company's Board of Directors. Such review includes a review of the fairness of the transaction or an independent appraisal. THRIFT INVESTIGATIONS The Company understands that investigations are being conducted by Federal grand juries and other government agencies in various states with regard to the failures of a number of thrifts with which MDC had business transactions during the period 1983 through mid-1988. The Company and its affiliates have received and responded to subpoenas requesting documents and information in connection with certain investigations and may in the future receive additional inquiries or subpoenas. No indictments or charges have been brought against the Company or any of its officials by any grand jury investigating the failure of any 10 savings and loan institutions. Although the Company believes there is no basis for the imposition against the Company or its officials of criminal or civil liability in connection therewith, were any indictment or charge to be brought against the Company, there could be a material adverse effect upon the Company's financial position and liquidity. TAX MATTERS M.D.C. Holdings, Inc. and its wholly-owned subsidiaries file a consolidated federal income tax return (the "MDC Consolidated Return"). Richmond Homes, Inc. I ("Richmond Homes") and its subsidiaries filed (or will file) separate consolidated federal income tax returns (the "Richmond Homes Consolidated Returns") from its inception (December 28, 1989) through the date Richmond Homes was merged into a wholly-owned subsidiary of MDC (February 2, 1994). The Internal Revenue Service (the "IRS") has completed its examination of the MDC Consolidated Returns for the years 1984 through 1987 and has proposed certain adjustments to the taxable income reflected in such returns. A substantial portion of the proposed adjustments concern the characterization of $22,000,000 in gains on sales of property held for investment, which were reported as capital gains. Certain of the other proposed adjustments would shift the recognition of certain items of income and expense from one year to another ("Timing Adjustments"). To the extent taxable income is increased by proposed Timing Adjustments, taxable income may be reduced by a corresponding amount in other years, nevertheless the Company would incur an interest charge as a result of such adjustment. The Company currently is protesting many of these proposed adjustments through the IRS appeals process and believes that the amount of these adjustments will be reduced as a result. In the opinion of management, adequate provision has been made for the additional income taxes and interest which may arise as a result of the proposed adjustments. The IRS currently is examining the MDC Consolidated Returns for the years 1988 through 1990 and the Richmond Homes Consolidated Returns for the years 1989 and 1990. No reports have been issued by the IRS in connection with these examinations. In the opinion of management, adequate provision has been made for additional income taxes and interest which may result from these examinations. 11 SELLING STOCKHOLDERS 1,445,000 of the shares of Common Stock covered by this Prospectus are being offered by the Selling Stockholders identified in the table below. Such shares have been, or may be acquired, by the Selling Stockholders pursuant to the exercise of options granted under the Company's Employee Equity Incentive Plan (the "Employee Plan") or the Company's Director Equity Incentive Plan (the "Director Plan"); the Employee Plan and the Director Plan are sometimes hereafter collectively referred to as the "Plans") or the exercise of a certain Non-Statutory Stock Option (the "Non-Statutory Option"). For further information with respect to the Plans and the Non-Statutory Option, see the Registration Statement of the Company (the "Registration Statement") of which this Prospectus is a part. The following table sets forth certain information, as of June 24, 1994, with respect to the Selling Stockholders and the shares of Common Stock offered hereby:
Shares owned Amount to To be Name and prior to this be offered owned after position with the Company offering (1) hereunder this offering(4) - ------------------------- ------------- ---------- -------------------- Percent Shares of class ------ -------- Larry A. Mizel, Chairman of 4,173,602 350,000 3,823,602 20.1% the Board of Directors and Chief Executive Officer (2) Spencer I. Brown, President 625,599 350,000 275,599 1.4% and Chief Operating Officer and Director David D. Mandarich, Executive 1,415,738 600,000 815,738 4.3% Vice President, Real Estate and a Director (3) Steven J. Borick, Director 75,000 25,000 50,000 * Gilbert Goldstein, Director 190,151 25,000 165,151 * William B. Kemper, Director 85,000 25,000 60,000 *
12
Shares owned Amount to To be Name and prior to this be offered owned after position with the Company offering (1) hereunder this offering(4) - ------------------------- ------------- ---------- -------------------- Arthur R. Lehl, -0- 10,000 * Chief Information Officer Daniel S. Japha, General -0- 20,000 * Counsel-Corporate Jack W. Davidson, -0- 20,000 * Executive Vice President Northern California Division Richmond American Homes of California, Inc. Robert T. Shiota -0- 20,000 * Vice President/Division Manager (Southern California Div.) Richmond American Homes of California, Inc. - --------------------- * Represents less than one percent of the outstanding shares of Common Stock. (1) Includes shares of Common Stock which may be purchased upon the exercise of all currently exercisable options and those exercisable within 60 days of the date of this Prospectus. (2) Includes 5,000 shares held jointly by Mr. Mizel's wife and her brother and sister, 1,115 shares owned by Mr. Mizel's minor children and 405,314 shares of Common Stock with respect to which Mr. Mizel may be considered the "beneficial owner," as defined under the Exchange Act, because he is a beneficiary of certain trusts which own all of the outstanding stock of CVentures, Inc., a corporation which controls the voting of these shares of Common Stock. Mr. Mizel is a director and officer of CVentures, Inc. Also includes 194,032 shares of Common Stock owned by certain trusts for the benefit of Mr. Mizel and certain members of his immediate family, over which shares Mr. Mizel does not exercise voting control, although he
13 has a limited power of appointment allowing him to direct the trustee to gift all or a portion of such shares to any person other than himself, members of his family or a creditor. Mr. Mizel disclaims beneficial ownership of the 194,032 shares. (3) David D. Mandarich was elected as Executive Vice President-Real Estate of the Company in April 1993 and appointed a director of the Company in March 1994. From April 1989 to April 1993, Mr. Mandarich served as a consultant to the Company. Includes 250,000 shares that were issued in connection with the Consulting Agreement dated April 6, 1989. (4) Assumes the sale of all shares offered hereby.
PLAN OF DISTRIBUTION The Company is unaware of any plan of distribution of any of the Selling Stockholders with respect to the resale of the shares of Common Stock offered hereby, but believes that those shares may from time to time be offered for sale either directly by the Selling Stockholders or by their pledgees, donees, transferees, or other successors in interest. Such sales may be made on the New York Stock Exchange ("NYSE") or the Pacific Stock Exchange, Incorporated ("PSE"), in the over-the-counter market, or in privately negotiated transactions. Sales of such shares on the NYSE, PSE or in the over-the-counter market may be by means of one or more of the following: (a) a block trade in which a broker or dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; (b) purchases by a dealer as principal and resale by such dealer for its account pursuant to this Prospectus; (c) distribution on the NYSE or PSE in accordance with the rules of the NYSE or PSE; and (d) ordinary brokerage transactions and transactions in which the broker solicits purchasers. In effecting sales, brokers or dealers engaged by the Selling Stockholders may arrange for other brokers or dealers to participate. In addition, any securities covered by this Prospectus which qualify for sale pursuant to Rule 144 may be sold under Rule 144 rather than pursuant to this Prospectus. The Selling Stockholders may pay commissions or allow discounts to any brokers or dealers participating in the resale of the shares offered hereby, which commissions or discounts will be 14 at the customary rates of such brokers for similar transactions. Those shares will be sold at market prices prevailing at the time of sale or at negotiated prices. As of the date of this Prospectus, the Company is not aware of any agreements, arrangements or understandings which have been entered into between any of the Selling Stockholders and any broker or dealer with respect to the sale of any of the shares of Common Stock to be offered hereby. In effecting such sales, each Selling Stockholder and brokers through whom such securities are sold may be deemed to be "underwriters" as that term is defined in Section 2(11)of the Securities Act of 1933, as amended, and any discounts, concessions or commissions received by any such person may be deemed to be underwriting discounts or commissions under the Act. Upon the Company being notified by a Selling Stockholder that any material arrangement has been entered into with an underwriter, broker or dealer for the sale of shares through a secondary distribution or a purchase by an underwriter, broker or dealer, a supplemented prospectus will be filed, if required, disclosing such of the following information as the Company believes appropriate: (i) the name of each such Selling Stockholder and of the participating underwriter, broker or dealer; (ii) the number of shares involved; (iii) the price at which such shares were sold; (iv) the commissions paid or discounts or concessions allowed to such underwriter, broker or dealer and (v) other facts material to the transaction. The Company does not believe that the Shares offered will materially affect the Company's ability to raise further capital. DESCRIPTION OF COMMON STOCK The Company has authorized 100,000,000 shares of common stock, $.01 par value (the "Common Stock"). COMMON STOCK At June 24, 1994, 19,020,000 shares of the Common Stock were issued and outstanding. Holders of shares of Common Stock are entitled to one vote for each share held of record on matters submitted to a vote of stockholders. Holders of shares of the Common Stock do not have cumulative voting rights in the election 15 of directors to the Company's Board of Directors, which is divided into three classes, with members of each class serving a three-year term. A vote by the holders of a majority of shares of the Common Stock present at a meeting at which a quorum is present is necessary to take action, except for certain extraordinary matters which require the approval of the holders of 80% of the outstanding shares of voting stock. In addition, certain Business Combinations (as defined in the Company's Certificate of Incorporation, as amended (the "Certificate") but generally, a merger or consolidation of the Company with any holder (directly or indirectly) of more than 10% of the outstanding shares of voting stock of the Company (an "Interested Stockholder") or certain related parties; the sale or other disposition by the Company of any assets or securities to an Interested Stockholder involving assets or securities having a value of $15,000,000 or more than 15% of the book value of the total assets or 15% of the stockholders' equity of the Company; the adoption of any plan or proposal for the liquidation or dissolution of the Company or for any amendment to the Company's Bylaws; or any reclassification of securities, recapitalization, merger with a subsidiary or ther transaction which has the effect of increasing an Interested Stockholder's roportionate ownership of the capital stock of the Company) involving the Company and an Interested Stockholder must be approved by the holders of 80% of the shares of outstanding voting stock, unless approved by a majority of Continuing Directors (as defined in the Certificate) or unless certain minimum price and procedural requirements are met. In the case of any Business Combination involving payments to holders of shares of the Common Stock, the fair market value per share of such payments would have to be at least equal to the highest value determined under the following alternatives: (i) the highest price per share of the Common Stock paid by or on behalf of the Interested Stockholder during the two years prior to the public announcement of the proposed Business Combination (the "Announcement Date") or in the transaction in which it became an Interested Stockholder, whichever is higher; and (ii) the fair market value per share of the Common Stock on the Announcement Date or on the date on which the Interested Stockholder became an Interested Stockholder, whichever is higher. "Fair market value" is defined in the Certificate to mean, in the case of exchange-listed or NASDAQ-quoted stock, the highest closing price or closing 16 bid in the 30 days preceding the date in question, and, in the case of other property, the fair market value as determined by a majority of the Continuing Directors. Subject to the preferences applicable to any then outstanding shares of preferred stock of the Company, holders of shares of Common Stock are entitled to dividends when and as declared by the Board of Directors of the Company from funds legally available therefor and are entitled, in the event of liquidation, to share ratably in all assets remaining after payment of liabilities. The shares of Common Stock are neither redeemable nor convertible, and the holders thereof have no preemptive or subscription rights to purchase any securities of the Company. All issued and outstanding shares of Common Stock are validly issued, fully paid and nonassessable. LEGAL MATTERS Certain matters with respect to the legality of the issuance of the Shares offered hereby will be passed upon for the Company by Daniel S. Japha, Esq., General Counsel-Corporate. EXPERTS The financial statements incorporated in this Prospectus by reference to the Annual Report on Form 10-K for the year ended December 31, 1993, have been so incorporated in reliance on the report of Price Waterhouse, independent accounts, given on the authority of said firm as experts in auditing and accounting. With respect to the unaudited condensed consolidated balance sheet of M.D.C. Holdings, Inc. and subsidiaries as of March 31, 1994, and the related condensed consolidated statements of income and of cash flows for the three- month periods ended March 31, 1994 and 1993 incorporated by reference in this Prospectus, Price Waterhouse has not carried out any significant or additional audit tests beyond those which would have been necessary if their report had not been included. Accordingly, the degree of reliance on their report on such information should be restricted in light of the limited nature of the review procedures applied. Price Waterhouse is not subject to the liability provisions of section 11 of the Securities Act of 1933 for their report on the unaudited consolidate financial information because that report is not a 17 "report" or a "part" of the registration statement prepared or certified by Price Waterhouse within the meaning of section 7 and 11 of the Act. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE This Prospectus incorporates by reference documents which are not presented herein or delivered herewith. Copies of any such documents filed by the Company, including exhibits to such documents, are available upon request, and without charge, from M.D.C. Holdings, Inc., 3600 South Yosemite Street, Suite 900, Denver, Colorado 80237, Attention: Daniel S. Japha, Esq. General Counsel- Corporate (telephone (303)773-1100). The following documents, which have been filed by the Company with the Commission, are hereby incorporated by reference in this Prospectus excluding those portions not deemed filed: (i) Annual Report on Form 10-K for the fiscal year ended December 31, 1993; (ii) Form 10-K/A-1 dated April 13, 1994 amending the Annual Report on Form 10-K for the fiscal year ended December 31, 1993; (iii) Quarterly Report on Form 10-Q dated May 16, 1994 for the three months ended March 31, 1994; (iv) Current Report on Form 8-K dated January 11, 1994; (v) Current Report on Form 8-K dated March 23, 1994; (vi) Proxy Statement dated May 25, 1994 relating to the 1994 Annual Meeting of Stockholders, as supplemented June 6, 1994. All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of the offering of the Shares shall be deemed to be incorporated by reference into this Prospectus and to be a part hereof from the respective dates of filing of such documents, excluding those portions of such documents not deemed filed. Any statement contained in a document 18 incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein, or in any subsequently filed document that also is or is modified to be incorporated by reference herein, modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES Delaware law and MDC's Bylaws permit indemnification of MDC's officers, directors and controlling persons against certain liabilities (including liabilities under the Securities Act) they may incur in such capacities. In general, directors may be indemnified against expenses, fines, settlements or judgments arising in connection with a legal proceeding if the actions resulting in such liabilities: (i) were taken in good faith; (ii) were reasonably believed to be in or not opposed to the Company's best interest; and (iii) with respect to any criminal action, the person to be indemnified had no reasonable grounds to believe the actions were unlawful. In the event an officer, director or controlling person is successful in defending a proceeding, indemnification of expenses is required. Unless the person seeking indemnification is successful on the merits, indemnification may ordinarily be granted only upon a determination by members of the Board who are not parties to the proceeding, by independent legal counsel, or by vote of stockholders that the applicable standard of conduct was met or if a determination is made by the Delaware Court of Chancery or the court in which the action or suit was brought that the person is reasonably entitled to indemnity. Delaware law also provides that a Company may indemnify any officers, directors or controlling persons to a greater extent than described above, if provided for under any bylaw, resolution of stockholders, or disinterested directors, or otherwise. Insofar as indemnification for liabilities arising under the Act may be permitted to directors, officers and persons controlling the Company pursuant to the foregoing provisions, the Company has been informed that in the opinion of the Commission, such indemnification is against public policy as expressed in the Act, and is therefore unenforceable. 19 PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT Item 3. INCORPORATION OF DOCUMENTS BY REFERENCE The following documents, which have been filed by the Registrant with the Securities and Exchange Commission, are hereby incorporated by reference into this Registration Statement. (a) Annual Report on Form 10-K for the fiscal year ended December 31, 1993. (b) Form 10-K/A-1 dated April 13, 1994 amending the Annual Report on Form 10-K for the fiscal year ended December 31, 1993. (c) Quarterly Report on Form 10-Q for the quarter ended March 31, 1994. (d) Proxy Statement dated May 25, 1994 relating to the 1994 Annual Meeting of Stockholders, as supplemented June 6, 1994. (e) The description of the Registrant's $.01 par value common stock is contained in the Form 8-A dated July 22, 1986. All documents subsequently filed by the Registrant pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, except those portions of such documents not deemed filed, shall be deemed to be incorporated by reference into this Registration Statement and shall be a part hereof from the date of such filing. Item 4. DESCRIPTION OF SECURITIES No information is required to be furnished hereunder because the Registrant's common stock is registered under Section 12 of the Securities Exchange Act of 1934. 2 Item 5. INTERESTS OF NAMED EXPERTS AND COUNSEL The opinion as to the legality of the securities being registered of Daniel S. Japha, Esq. who is employed full time by the Registrant as General Counsel- Corporate, is filed as an exhibit to this Registration Statement. Mr. Japha has no substantial interest in the Registrant as defined in instructions to Item 509 of Regulation S-K. Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS Article Eighth of the Registrant's Certificate of Incorporation and Article VIII of the Registrant's bylaws provide for mandatory indemnification of directors and officers to the fullest extent permitted by Delaware law. A summary of the circumstances in which such indemnification is provided for is contained below, but that description is qualified in its entirety by reference to Article Eighth of the Registrant's Certificate of Incorporation, Article VIII of the Registrant's By-Laws and the relevant section of the Delaware General Corporation Law. Section 145 of the Delaware General Corporation Law, in general, provides that a corporation may indemnify any director, officer, employee or agent of a corporation against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement, actually and reasonably incurred in a proceeding (including any civil, criminal, administrative or investigative proceeding other than an action by or in the right of the corporation) to which the person was a party by reason of such status. Such indemnity may be provided if the person's actions resulting in the liabilities: (i) were taken in good faith; (ii) were reasonably believed to have been in or not opposed to the corporation's best interest; and (iii) with respect to any criminal action, the person had no reasonable cause to believe the actions were unlawful. Unless ordered by a court, indemnification generally may be awarded only after a determination of independent members of the Board of Directors or a committee thereof, by independent legal counsel or by vote of the stockholders that the applicable standard of conduct was met by the individual to be indemnified. 3 Indemnification in connection with a proceeding by or in the right of the corporation in which the director, officer, employee or agent is successful is permitted only with respect to expenses, including attorneys' fees actually and reasonably incurred in connection with the defense. In such actions, the person to be indemnified must have acted in good faith, in a manner believed to have been in or not opposed to the corporation's best interest and must not have been adjudged liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. Indemnification is otherwise prohibited in connection with a proceeding brought on behalf of the corporation, or in connection with any proceeding charging improper personal benefit to the director in which the director is adjudged liable for receipt of an improper personal benefit. Section 145 further provides that to the extent a director, officer, employee or agent is wholly successful on the merits or otherwise in defense of any proceeding to which he was a party, he is entitled to receive indemnification against expenses, (including attorneys' fees) actually and reasonably incurred in connection with the proceeding. Delaware law authorizes a corporation to reimburse or pay reasonable expenses incurred by a director, officer, employee or agent in connection with a proceeding, in advance of a final disposition of the matter. Such advances of expenses are permitted if the person furnishes to the corporation a written agreement to repay such advances if it is determined that he is not entitled to be indemnified by the corporation. The statutory section cited above further specifies that any provisions for indemnification or advances for expenses does not exclude other rights under the corporation's Certificate of Incorporation, Bylaws, resolutions of its stockholders or disinterested directors, or otherwise. These indemnification provisions continue for a person who has ceased to be a director, officer, employee or agent of the corporation and inure to the benefit of the heirs, executors and administrators of such persons. 4 The statutory provision cited above also grants the power to a corporation to purchase and maintain insurance policies which protect any director, officers, employee or agent against any liability asserted against or incurred by them in such capacity arising out of his status as such. Such policies may provide for indemnification whether or not the corporation would otherwise have the power to provide for it. No such policies providing protection against liabilities imposed under the securities laws have been obtained by the Registrant. The Delaware General Corporation Law and Article Eighth of the Registrant's Certificate of Incorporation, under certain circumstances provide that the Registrant's directors will not be personally liable to the Registrant for monetary damages for breach of fiduciary duty. A summary of the circumstances in which such exoneration is provided is contained below, but that description is qualified in its entirety by reference to Article Eighth of the Registrant's Certificate of Incorporation and the relevant Sections of the Delaware General Corporation Law. In general, the Delaware General Corporation Law provides that any director of a corporation shall not be personally liable to the corporation or its stockholders for damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the corporation to its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived any personal benefit. If the Delaware General Corporation Law is amended to further eliminate or limit the personal liability of directors after adoption by a corporation of this provision, then the liability of a director of a corporation shall be eliminated or limited to the fullest extent permitted by the amended Delaware General Corporation Law. Item 7. EXEMPTION FROM REGISTRATION CLAIMED Not Applicable. 5 Item 8. EXHIBITS EXHIBIT NO. DESCRIPTION 4.1 M.D.C. Holdings, Inc. Employee Equity Incentive Plan (incorporated herein by reference to Exhibit A of the Company's Proxy Statement dated May 14, 1993 relating to the 1993 Annual Meeting of Stockholders)* 4.2 M.D.C. Holdings, Inc. Director Equity Incentive Plan (incorporated herein by reference to Exhibit B of the Company's Proxy Statement dated May 14, 1993 relating to the 1993 Annual Meeting of Stockholders)* 4.3(a) Form of Employee Incentive Stock Option 4.3(b) Form of Employee Non-Statutory Option 4.3(c) Form of Director Non-Statutory Option 4.4 Form of Consulting Agreement between David D. Mandarich and the Registrant dated as of April 6, 1989 (incorporated by reference to Exhibit 10.19(c) to the Company's Annual Report on Form 10-K for the year ended December 31, 1988)* 4.5 Non-Qualified Stock Option Agreement, as amended 5 Opinion of Daniel S. Japha, Esq. as to legality of securities being registered 23.1 Consent of Price Waterhouse, Certified Public Accountants 23.2 Consent of Daniel S. Japha, Esq. (filed as part of Exhibit 5 above) - ----------- * Incorporated herein by reference. 6 Item 9. UNDERTAKINGS (a) The undersigned Registrant hereby undertakes: (i) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. (ii) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (iii) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (h) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, 7 officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. 8 Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Denver, State of Colorado, on July , 1994. M.D.C. Holdings, Inc. By:________________________________ Larry A. Mizel, Chairman of the Board and Chief Executive Officer POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers and/or directors of M.D.C. Holdings, Inc., by virtue of their signatures appearing below, hereby constitute and appoint Larry A. Mizel, Spencer I. Browne and Paris G. Reece III, or any one of them, with full power of substitution, as attorney- in-fact in their names, places and steads to execute any and all amendments to this Registration Statement on Form S-8 in capacities set forth opposite their names on the signature page thereof and hereby ratify all that said attorney-in- fact may do by virtue thereof. Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated. SIGNATURE TITLE DATE ____________________ Chairman of the ___________, 1994 Larry A. Mizel Board of Directors and Chief Executive Officer 9 ____________________ President and Chief ___________, 1994 Spencer I. Browne Operating Officer ____________________ Executive Vice ___________, 1994 David D. Mandarich President - Real Estate and Director ____________________ Vice President, ___________, 1994 Paris G. Reece III Secretary, Treas- urer and Chief Financial Officer (principal finan- cial and account- ing officer) ____________________ Director ___________, 1994 Steven J. Borick ____________________ Director ___________, 1994 Gilbert Goldstein ____________________ Director ___________, 1994 William B. Kemper ____________________ Director ___________,1994 Herbert T. Buchwald 10 EXHIBIT INDEX EXHIBIT NO. DESCRIPTION 4.1 M.D.C. Holdings, Inc. Employee Equity Incentive Plan (incorporated herein by reference to Exhibit A of the Company's Proxy Statement dated May 14, 1993 relating to the 1993 Annual Meeting of Stockholders)* 4.2 M.D.C. Holdings, Inc. Director Equity Incentive Plan (incorporated herein by reference to Exhibit B of the Company's Proxy Statement dated May 14, 1993 relating to the 1993 Annual Meeting of Stockholders)* 4.3(a) Form of Employee Incentive Stock Option 4.3(b) Form of Employee Non-Statutory Option 4.3(c) Form of Director Non-Statutory Option 4.4 Form of Consulting Agreement between David D. Mandarich and the Registrant dated as of April 6, 1989 (incorporated by reference to Exhibit 10.19(c) to the Company's Annual Report on Form 10-K for the year ended December 31, 1988)* 4.5 Non-Qualified Stock Option Agreement, as amended 5 Opinion of Daniel S. Japha, Esq. as to legality of securities being registered 23.1 Consent of Price Waterhouse, Certified Public Accountants 23.2 Consent of Daniel S. Japha, Esq. (filed as part of Exhibit 5 above) - ------------ * Incorporated herein by reference. EX-4.3(A) 2 EXHIBIT 4.3 (A) EXHIBIT 4.3(a) Form of Employee Incentive Stock Option M.D.C. HOLDINGS, INC. EMPLOYEE EQUITY INCENTIVE PLAN INCENTIVE STOCK OPTION AGREEMENT THIS AGREEMENT is made on and as of ______________________, 19___ (the "Date of Grant") between M.D.C. HOLDINGS, INC., a Delaware corporation (the "Company"), and _______________________ (the "Participant") pursuant to the provisions of the Company's Employee Equity Incentive Plan (the "Plan"). The parties hereto agree as follows: ARTICLE I DEFINITIONS Whenever the following terms are used in this Agreement, they shall have the meaning specified below unless the context clearly indicates to the contrary. The masculine pronoun shall include the feminine and neuter, and the singular the plural, where the context so indicates. Capitalized terms not otherwise defined in this Agreement shall have the meaning specified in the Plan. SECTION 1.1 - OPTION "Option" shall mean the incentive stock option to purchase Common Stock, $.01 par value (the "Common Stock"), of the Company granted under this Agreement. SECTION 1.2 - TERMINATION OF EMPLOYMENT "Termination of Employment" shall mean the time when the employee-employer relationship between the Participant and the Company or a Subsidiary is terminated for any reason, with or without cause, including, but not by way of limitation, a termination by resignation, discharge, death or retirement but excluding terminations where there is a simultaneous re-employment by the Company or a Subsidiary. ARTICLE II GRANT OF OPTION SECTION 2.1 - GRANT OF OPTION For good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, on the date hereof, the Company irrevocably grants to the Participant the option to purchase any part or all of an aggregate of ____________________ shares of its Common Stock upon the terms and conditions set forth in this Agreement. SECTION 2.2 - PURCHASE PRICE The purchase price of the shares of Common Stock covered by the Option shall be $__________ per share without commission or other charge. SECTION 2.3 - NO RIGHT TO CONTINUED EMPLOYMENT Nothing in this Agreement or in the Plan shall confer upon the Participant any right to continue in the employ of the Company or any Subsidiary or shall interfere with or restrict in any way the rights of the Company and its Subsidiaries, which are hereby expressly reserved, to discharge the Participant at any time for any reason whatsoever, with or without good cause. SECTION 2.4 - ADJUSTMENTS IN OPTION In the event that the outstanding shares of the Common Stock subject to the Option are changed into or exchanged for a different number or kind of shares of the Company or other securities of the Company by reason of merger, consolidation, recapitalization, reclassification, stock split-up, stock dividend, combination of shares, rights offering, issuance of warrants or otherwise, the Committee shall make a reasonable, appropriate and equitable adjustment in the number and kind of shares as to which the Option, or portions thereof then unexercised, shall be exercisable, to the end that after such event the Participant's proportionate interest shall be maintained as before the occurrence of such event. Such adjustment in the Option shall be made without change in the total price applicable to the Option or the unexercised portion of the Option (except for any change in the aggregate price resulting from rounding off of share quantities or prices) and with any necessary corresponding adjust- ment in the price per share of the shares of Common Stock covered by the Option. Any such adjustment made by the Committee shall be final and binding upon the Participant, the Company and all other interested persons. 2 ARTICLE III PERIOD OF EXERCISABILITY SECTION 3.1 - COMMENCEMENT OF EXERCISABILITY (a) The Option shall not become exercisable in whole or in part prior to the expiration of the six-month period commencing after the Date of Grant. (b) Subject to the other provisions of this Section 3.1, the Option granted hereunder shall be exercisable in whole or in part as follows: (i) 33 1/3% of the shares covered by the Option on __________, 199_; (ii) an additional 33 1/3% of the shares covered by the Option on __________, 199_; (iii) and the remaining 33 1/3% of the shares covered by the Option on _________, 199_. (c) Notwithstanding any other provisions of this Section 3.1, the Option shall not be exercisable unless the holder thereof shall have been an Employee of the Company or a Subsidiary for a period of at least six months prior to such exercise; provided, however, that a Participant need not be an Employee at the time of exercise. SECTION 3.2 - DURATION OF EXERCISABILITY The installments provided for in Section 3.1 are cumulative. Each such installment which becomes exercisable pursuant to Section 3.1 shall remain exercisable until it becomes unexercisable under Section 3.3. SECTION 3.3 - EXPIRATION OF OPTION The Option may not be exercised to any extent by anyone after the first to occur of the following events: (a) The expiration of three months from the date of the Participant's Termination of Employment for any reason other than the Participant's death or Disability; or (b) The expiration of one year from the date of the Participant's Termination of Employment by reason of the Participant's death or Disability; or (c) The expiration of six years from the Date of Grant; or 3 (d) The date of the Participant's Termination of Employment if such Termination of Employment was for cause as reasonably determined by the Board. SECTION 3.4 - ACCELERATION OF EXERCISABILITY (a) Notwithstanding Sections 2.4, 3.1(b) and 3.1(c) but subject to Sections 3.1(a), 3.4(c) and 3.4(d), the Option, or any portion thereof, granted under this Agreement that is not yet exercisable shall become exercisable immediately prior to the occurrence of a merger or consolidation of the Company with or into another corporation, the acquisition by another corporation or person of all or substantially all of the Company's assets or 80% or more of the Company's then outstanding voting stock or the liquidation or dissolution of the Company (each, a "Transaction"). At least ten days prior to the effective date of such Transaction, the Company shall give the Participant holding the Option notice of such event if the Option has not been fully exercised. During this ten-day period, the Participant electing to exercise his or her Options shall comply with all of the requirements of Sections 4.3 and 4.4 of this Agreement. In the event that such Transaction becomes effective, the Option so exercised shall be deemed to have been exercised immediately prior to the effective date of such Transaction. In the event that such Transaction fails to transpire, the Participant's election under this paragraph shall be of no effect and the Participant's Option shall remain subject to the restrictions to which it was originally subject. (b) In the event that a Transaction occurs, the Option, or any portion thereof, that is not exercised prior to the occurrence of a Transaction shall be cancelled, and the Participant holding such cancelled Option shall receive in exchange therefor a cash payment equal to the greater of (i) the Fair Market Value (as determined under Section 1.13 of the Plan) of a share of Common Stock measured on the date immediately prior to such Transaction less the per share exercise price set forth in the Participant's Option, multiplied by the number of shares of Common Stock purchasable under the Option; or (ii) the fair market value, as determined by the Board in its reasonable discretion, of the cash, securities or other consideration into which a share of Common Stock is to be exchanged pursuant to the Transaction, less the exercise price set forth in the Participant's Option, multiplied by the number of shares of Common Stock purchasable under the Option. (c) Notwithstanding the foregoing, Options that are not exercisable on the date of a Transaction shall only become exercisable as described in subsection (a) hereof or cancelled and settled for cash or other consideration as described in subsection (b) hereof to the extent that such exercise and issuance of shares of Common Stock or payment with respect to the Participant continues to be deductible by the Company pursuant to Section 280G of the Code. All determinations in applying this Section 3.4 shall be made by the Board in its reasonable discretion, and all such determinations shall be final and binding on the Participant, the Company and any interested party. 4 (d) Notwithstanding the foregoing, no such acceleration of exercisability described in subsection (a) hereof or cancellation and settlement described in subsection (b) hereof shall take place if: (i) The Participant's Option becomes unexercisable under Section 3.3; or (ii) In connection with a Transaction, provision is made for an assumption of the Participant's Option or a substitution therefor of a new Option by the resulting or acquiring corporation or a parent or subsidiary of such corporation under similar terms and conditions as reflected in this Agreement. ARTICLE IV EXERCISE OF OPTION SECTION 4.1 - PERSON ELIGIBLE TO EXERCISE During the lifetime of the Participant, only the Participant may exercise the Option or any portion thereof. After the death of the Participant, any exercisable portion of the Option may, prior to the time when such portion expires or becomes unexercisable under Sections 3.3 or 3.4, be exercised by his personal representative or by any person empowered to do so under the deceased Participant's will or under the then applicable laws of descent and distribution. SECTION 4.2 - PARTIAL EXERCISE Any exercisable portion of the Option or the entire Option, if then wholly exercisable, may be exercised in whole or in part at any time prior to the time when the Option or portion thereof becomes unexercisable under Sections 3.3 or 3.4; provided, however, that each partial exercise shall be for not less than 100 shares (or the minimum installment set forth in Section 3.1, if a smaller number of shares) and shall be for whole shares only. SECTION 4.3 - MANNER OF EXERCISE The Option, or any exercisable portion thereof, may be exercised solely by delivery to the Director of Stockholder Relations of all of the following prior to the time when the Option or such portion becomes unexercisable under Sections 3.3 or 3.4: (a) Notice in writing signed by the Participant or other person then entitled to exercise the Option or portion, stating that the Option or portion is exercised, such notice complying with all applicable rules established by the Committee and in such form as determined by the Secretary of the Company; and 5 (b) (i) Full payment (by check) for the shares with respect to which the Option or portion is thereby exercised; or (ii) Full payment by delivery to the Company of shares of the Common Stock owned by the Participant duly endorsed for transfer to the Company by the Participant or other person entitled to exercise the Option or portion thereof, with a Fair Market Value on the date of delivery equal to the purchase price of the shares with respect to which such Option or portion thereof is thereby exercised; or (iii) Full payment in any other form approved by the Committee, consistent with applicable law and the Plan; or (iv) Any combination of the consideration provided in the foregoing subsections (i), (ii) and (iii); and (c) In the event the Option or portion thereof shall be exercised pursuant to Section 4.1 by any person or persons other than the Participant, appropriate proof of the right of such person or persons to exercise the Option or portion thereof. SECTION 4.4 - CONDITIONS TO ISSUANCE OF STOCK CERTIFICATES (a) The Common Stock shall not be issued in respect of the Option granted hereunder unless the exercise of the Option and the issuance and delivery of shares of Common Stock pursuant thereto shall comply with all relevant provisions of law, including the law of the Company's state of incorporation, the Securities Act, the Exchange Act, the rules and regulations thereunder and the requirements of any stock exchange upon which the Common Stock may then be listed, and shall be further subject to the approval of the Company's counsel with respect to such compliance. (b) The Plan, this Agreement and the grant and exercise of the Option to purchase shares of Common Stock hereunder, and the Company's obligation to sell and deliver shares upon the exercise of rights to purchase shares, shall be subject to all applicable federal and state laws, rules and regulations, and to such approvals by any regulatory or governmental agency which may, in the written opinion of counsel for the Company, be required. SECTION 4.5 - RIGHTS AS STOCKHOLDER The holder of the Option shall not be, nor have any of the rights or privileges of, a stockholder of the Company in respect of any shares purchasable upon the exercise of any part of the Option unless and until certificates representing such shares shall have been issued by the Company to the holder. 6 ARTICLE V OTHER PROVISIONS SECTION 5.1 - ADMINISTRATION The Committee shall have the power to interpret the Plan and this Agreement and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret, amend or revoke any such rules. All actions taken and all interpretations and determinations made by the Committee reasonably and in good faith shall be final and binding upon the Participant, the Company and all other interested persons. No member of the Committee shall be personally liable for any action, determination or interpretation made in good faith with respect to the Plan or the Option, and all members of the Committee shall be fully protected by the Company with respect to any such action, determination or interpretation. In its absolute discretion, the Board may at any time and from time to time exercise any and all rights and duties of the Committee under the Plan and this Agreement, excepting those rights and duties that may only be performed by a Committee of Disinterested Directors under Rule 16b-3 of the Exchange Act. SECTION 5.2 - OPTION SUBJECT TO TERMS OF PLAN This Option Agreement and the rights of the Participant hereunder are subject to all the terms and conditions of the Plan, as the same may be amended from time to time, as well as to such rules and regulations as the Committee may adopt for administration of the Plan. Any inconsistency between this Option Agreement and the Plan shall be resolved in favor of the Plan. SECTION 5.3 - OPTION NOT TRANSFERABLE Neither the Option nor any interest or right therein or part thereof shall be subject to the debts, contracts or engagements of the Participant or his successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect; provided, however, that this Section 5.3 shall not prevent transfers by will or by the applicable laws of descent and distribution. SECTION 5.4 - NOTICES Any notice to be given under the terms of this Agreement to the Company shall be addressed to the Company in care of its Director of Stockholder Relations, and any notice to be given to the Participant shall be addressed to the Participant at the address given beneath his 7 signature hereto. By a notice given pursuant to this Section 5.4, either party may hereafter designate a different address for notices to be given to him. Any notice which is required to be given to the Participant shall, if the Participant is then deceased, be given to the Participant's personal representative if such representative has previously informed the Company of his status and address by written notice under this Section 5.4. Any notice shall be deemed duly given when (i) enclosed in a properly sealed envelope or wrapper addressed as aforesaid, deposited (with postage prepaid) in a post office or branch post office regularly maintained by the United States Postal Service, (ii) upon deposit with a private overnight delivery service guaranteeing next day service, or (iii) upon receipt of a facsimile indicating confirmation of receipt. SECTION 5.5 - TAX WITHHOLDING The Company shall be entitled to require payment or deduction from other compensation payable to the Participant of any sums required by federal, state or local tax law to be withheld with respect to the grant or exercise of the Option or any portion thereof. The Participant may elect to have the Company withhold shares of Common Stock (or allow the return of shares of Common Stock) having a Fair Market Value equal to the sums required to be withheld. If the Participant elects to advance such sums directly, written notice of that election shall be delivered on or prior to such exercise and, whether pursuant to such election or pursuant to a requirement imposed by the Company, payment by check of such sums for taxes shall be delivered within two days after the date of exercise. If the Participant elects to have the Company withhold shares of Common Stock (or allow the return of shares of Common Stock) having a Fair Market Value equal to the sums required to be withheld, the value of the shares of Common Stock to be withheld (or returned as the case may be) will be equal to the Fair Market Value of such shares on the date that the amount of tax to be withheld is to be determined (the "Tax Date"). An election by the Participant to have shares of Common Stock withheld for this purpose will be subject to the following restrictions: (1) the election must be made on or prior to the Tax Date; (2) the election must be irrevocable; (3) the election shall be subject to the disapproval of the Committee; and (4) if the Participant is an officer of the Company within the meaning of Section 16 of the Exchange Act, the election shall be subject to such additional restrictions as the Committee may impose in an effort to secure the benefits of any regulations thereunder. The Committee shall not be obligated to issue shares to the Participant upon exercise of the Option or portion thereof until such payment has been received or shares have been so withheld, unless withholding (or offset against a cash payment) as of or prior to the date of such exercise is sufficient to cover all such sums due or which may be due with respect to such exercise. SECTION 5.6 - LOANS The Committee may, in its discretion, extend one or more loans to the Participant in connection with the exercise or receipt of outstanding Options granted under this Plan. The terms and conditions of any such loan shall be set by the Committee and may include, in the Committee's discretion, loans that are secured, unsecured, recourse or nonrecourse. 8 SECTION 5.7 - COMPLIANCE WITH RULE 16b-3 With respect to persons subject to Section 16 of the Exchange Act, transactions under this Agreement are intended to comply with all applicable conditions of Rule 16b-3 or its successors under the Exchange Act. To the extent any provision of the Plan, this Agreement or action by the Committee fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Committee. SECTION 5.8 - TITLES Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement. Section 5.9 - CONSTRUCTION This Agreement shall be administered, interpreted and enforced under the laws of the State of Delaware. IN WITNESS WHEREOF, the parties have caused this Option Agreement to be executed to be effective as of the Date of Grant. M.D.C. HOLDINGS, INC. By:_________________________________ Name:__________________________ Title:_________________________ ____________________________________ Employee's Signature ____________________________________ Print Name ____________________________________ ____________________________________ Home Address ____________________________________ Social Security Number 9 EX-4.3(B) 3 EXHIBIT 4.3 (B) EXHIBIT 4.3(b) Form of Employee Non-Statutory Option M.D.C. HOLDINGS, INC. EMPLOYEE EQUITY INCENTIVE PLAN NON-STATUTORY OPTION AGREEMENT THIS AGREEMENT is made on and as of ____________________, 19___ (the "Date of Grant") between M.D.C. HOLDINGS, INC., a Delaware corporation (the "Company"), and _______________________ (the "Participant") pursuant to the provisions of the Company's Employee Equity Incentive Plan (the "Plan"). The parties hereto agree as follows: ARTICLE I DEFINITIONS Whenever the following terms are used in this Agreement, they shall have the meaning specified below unless the context clearly indicates to the contrary. The masculine pronoun shall include the feminine and neuter, and the singular the plural, where the context so indicates. Capitalized terms not otherwise defined in this Agreement shall have the meaning specified in the Plan. SECTION 1.1 - OPTION "Option" shall mean the non-statutory option to purchase Common Stock, $.01 par value (the "Common Stock"), of the Company granted under this Agreement. SECTION 1.2 - TERMINATION OF EMPLOYMENT "Termination of Employment" shall mean the time when the employee-employer relationship between the Participant and the Company or a Subsidiary is terminated for any reason, with or without cause, including, but not by way of limitation, a termination by resignation, discharge, death or retirement but excluding terminations where there is a simultaneous re-employment by the Company or a Subsidiary. 1 ARTICLE II GRANT OF OPTION SECTION 2.1 - GRANT OF OPTION For good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, on the date hereof, the Company irrevocably grants to the Participant the option to purchase any part or all of an aggregate of ____________________ shares of its Common Stock upon the terms and conditions set forth in this Agreement. SECTION 2.2 - PURCHASE PRICE The purchase price of the shares of Common Stock covered by the Option shall be $__________ per share without commission or other charge. SECTION 2.3 - NO RIGHT TO CONTINUED EMPLOYMENT Nothing in this Agreement or in the Plan shall confer upon the Participant any right to continue in the employ of the Company or any Subsidiary or shall interfere with or restrict in any way the rights of the Company and its Subsidiaries, which are hereby expressly reserved, to discharge the Participant at any time for any reason whatsoever, with or without good cause. SECTION 2.4 - ADJUSTMENTS IN OPTION In the event that the outstanding shares of the Common Stock subject to the Option are changed into or exchanged for a different number or kind of shares of the Company or other securities of the Company by reason of merger, consolidation, recapitalization, reclassification, stock split-up, stock dividend, combination of shares, rights offering, issuance of warrants or otherwise, the Committee shall make a reasonable, appropriate and equitable adjustment in the number and kind of shares as to which the Option, or portions thereof then unexercised, shall be exercisable, to the end that after such event the Participant's proportionate interest shall be maintained as before the occurrence of such event. Such adjustment in the Option shall be made without change in the total price applicable to the Option or the unexercised portion of the Option (except for any change in the aggregate price resulting from rounding off of share quantities or prices) and with any necessary corresponding adjustment in the price per share of the shares of Common Stock covered by the Option. Any such adjustment made by the Committee shall be final and binding upon the Participant, the Company and all other interested persons. 2 ARTICLE III PERIOD OF EXERCISABILITY SECTION 3.1 - COMMENCEMENT OF EXERCISABILITY (a) The Option shall not become exercisable in whole or in part prior to the expiration of the six-month period commencing after the Date of Grant. (b) Subject to the other provisions of this Section 3.1, the Option granted hereunder shall be exercisable in whole or in part as follows: (i) 33 1/3% of the shares covered by the Option on ________, 199_; (ii) an additional 33 1/3% of the shares covered by the Option on _________, 199_; and (iii) the remaining 33 1/3% of the shares covered by the Option on ________, 199_. (c) Notwithstanding any other provisions of this Section 3.1, the Option shall not be exercisable unless the holder thereof shall have been an Employee of the Company or a Subsidiary for a period of at least six months prior to such exercise; provided, however, that a Participant need not be an Employee at the time of exercise. SECTION 3.2 - DURATION OF EXERCISABILITY The installments provided for in Section 3.1 are cumulative. Each such installment which becomes exercisable pursuant to Section 3.1 shall remain exercisable until it becomes unexercisable under Section 3.3. SECTION 3.3 - EXPIRATION OF OPTION The Option may not be exercised to any extent by anyone after the first to occur of the following events: (a) The expiration of one year from the date of the Participant's Termination of Employment by reason of the Participant's death or Disability; or (b) The expiration of six years from the Date of Grant in the case an Employee who is not an officer or director; or (c) The expiration of five years from the Date of Grant in the case of an Employee who is an officer or director; or 3 (d) The date of the Participant's Termination of Employment if such Termination of Employment was for cause as reasonably determined by the Board. SECTION 3.4 - ACCELERATION OF EXERCISABILITY (a) Notwithstanding Sections 2.4, 3.1(b) and 3.1(c) but subject to Sections 3.1(a), 3.4(c) and 3.4(d), the Option, or any portion thereof, granted under this Agreement that is not yet exercisable shall become exercisable immediately prior to the occurrence of a merger or consolidation of the Company with or into another corporation, the acquisition by another corporation or person of all or substantially all of the Company's assets or 80% or more of the Company's then outstanding voting stock or the liquidation or dissolution of the Company (each, a "Transaction"). At least ten days prior to the effective date of such Transaction, the Company shall give the Participant holding the Option notice of such event if the Option has not been fully exercised. During this ten-day period, the Participant electing to exercise his or her Options shall comply with all of the requirements of Sections 4.3 and 4.4 of this Agreement. In the event that such Transaction becomes effective, the Option so exercised shall be deemed to have been exercised immediately prior to the effective date of such Transaction. In the event that such Transaction fails to transpire, the Participant's election under this paragraph shall be of no effect and the Participant's Option shall remain subject to the restrictions to which it was originally subject. (b) In the event that a Transaction occurs, the Option, or any portion thereof, that is not exercised prior to the occurrence of a Transaction shall be cancelled, and the Participant holding such cancelled Option shall receive in exchange therefor a cash payment equal to the greater of (i) the Fair Market Value (as determined under Section 1.13 of the Plan) of a share of Common Stock measured on the date immediately prior to such Transaction less the per share exercise price set forth in the Participant's Option, multiplied by the number of shares of Common Stock purchasable under the Option; or (ii) the fair market value, as determined by the Board in its reasonable discretion, of the cash, securities or other consideration into which a share of Common Stock is to be exchanged pursuant to the Transaction, less the exercise price set forth in the Participant's Option, multiplied by the number of shares of Common Stock purchasable under the Option. (c) Notwithstanding the foregoing, Options that are not exercisable on the date of a Transaction shall only become exercisable as described in subsection (a) hereof or cancelled and settled for cash or other consideration as described in subsection (b) hereof to the extent that such exercise and issuance of shares of Common Stock or payment with respect to the Participant continues to be deductible by the Company pursuant to Section 280G of the Code. All determinations in applying this Section 3.4 shall be made by the Board in its reasonable discretion, and all such determinations shall be final and binding on the Participant, the Company and any interested party. 4 (d) Notwithstanding the foregoing, no such acceleration of exercisability described in subsection (a) hereof or cancellation and settlement described in subsection (b) hereof shall take place if: (i) The Participant's Option becomes unexercisable under Section 3.3; or (ii) In connection with a Transaction, provision is made for an assumption of the Participant's Option or a substitution therefor of a new Option by the resulting or acquiring corporation or a parent or subsidiary of such corporation under similar terms and conditions as reflected in this Agreement. ARTICLE IV EXERCISE OF OPTION SECTION 4.1 - PERSON ELIGIBLE TO EXERCISE During the lifetime of the Participant, only the Participant may exercise the Option or any portion thereof. After the death of the Participant, any exercisable portion of the Option may, prior to the time when such portion expires or becomes unexercisable under Sections 3.3 or 3.4, be exercised by his personal representative or by any person empowered to do so under the deceased Participant's will or under the then applicable laws of descent and distribution. SECTION 4.2 - PARTIAL EXERCISE Any exercisable portion of the Option or the entire Option, if then wholly exercisable, may be exercised in whole or in part at any time prior to the time when the Option or portion thereof becomes unexercisable under Sections 3.3 or 3.4; provided, however, that each partial exercise shall be for not less than 100 shares (or the minimum installment set forth in Section 3.1, if a smaller number of shares) and shall be for whole shares only. SECTION 4.3 - MANNER OF EXERCISE The Option, or any exercisable portion thereof, may be exercised solely by delivery to the Director of Stockholder Relations of all of the following prior to the time when the Option or such portion becomes unexercisable under Sections 3.3 or 3.4: (a) Notice in writing signed by the Participant or other person then entitled to exercise the Option or portion, stating that the Option or portion is exercised, such notice complying with all applicable rules established by the Committee and in such form as determined by the Secretary of the Company; and 5 (b) (i) Full payment (by check) for the shares with respect to which the Option or portion is thereby exercised; or (ii) Full payment by delivery to the Company of shares of the Common Stock owned by the Participant duly endorsed for transfer to the Company by the Participant or other person entitled to exercise the Option or portion thereof, with a Fair Market Value on the date of delivery equal to the purchase price of the shares with respect to which such Option or portion thereof is thereby exercised; or (iii) Full payment in any other form approved by the Committee, consistent with applicable law and the Plan; or (iv) Any combination of the consideration provided in the foregoing subsections (i), (ii) and (iii); and (c) In the event the Option or portion thereof shall be exercised pursuant to Section 4.1 by any person or persons other than the Participant, appropriate proof of the right of such person or persons to exercise the Option or portion thereof. SECTION 4.4 - CONDITIONS TO ISSUANCE OF STOCK CERTIFICATES (a) The Common Stock shall not be issued in respect of the Option granted hereunder unless the exercise of the Option and the issuance and delivery of shares of Common Stock pursuant thereto shall comply with all relevant provisions of law, including the law of the Company's state of incorporation, the Securities Act, the Exchange Act, the rules and regulations thereunder and the requirements of any stock exchange upon which the Common Stock may then be listed, and shall be further subject to the approval of the Company's counsel with respect to such compliance. (b) The Plan, this Agreement and the grant and exercise of the Option to purchase shares of Common Stock hereunder, and the Company's obligation to sell and deliver shares upon the exercise of rights to purchase shares, shall be subject to all applicable federal and state laws, rules and regulations, and to such approvals by any regulatory or governmental agency which may, in the written opinion of counsel for the Company, be required. SECTION 4.5 - RIGHTS AS STOCKHOLDER The holder of the Option shall not be, nor have any of the rights or privileges of, a stockholder of the Company in respect of any shares purchasable upon the exercise of any part of the Option unless and until certificates representing such shares shall have been issued by the Company to the holder. 6 ARTICLE V OTHER PROVISIONS SECTION 5.1 - ADMINISTRATION The Committee shall have the power to interpret the Plan and this Agreement and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret, amend or revoke any such rules. All actions taken and all interpretations and determinations made by the Committee reasonably and in good faith shall be final and binding upon the Participant, the Company and all other interested persons. No member of the Committee shall be personally liable for any action, determination or interpretation made in good faith with respect to the Plan or the Option, and all members of the Committee shall be fully protected by the Company with respect to any such action, determination or interpretation. In its absolute discretion, the Board may at any time and from time to time exercise any and all rights and duties of the Committee under the Plan and this Agreement, excepting those rights and duties that may only be performed by a Committee of Disinterested Directors under Rule 16b-3 of the Exchange Act. SECTION 5.2 - OPTION SUBJECT TO TERMS OF PLAN This Option Agreement and the rights of the Participant hereunder are subject to all the terms and conditions of the Plan, as the same may be amended from time to time, as well as to such rules and regulations as the Committee may adopt for administration of the Plan. Any inconsistency between this Option Agreement and the Plan shall be resolved in favor of the Plan. SECTION 5.3 - OPTION NOT TRANSFERABLE Neither the Option nor any interest or right therein or part thereof shall be subject to the debts, contracts or engagements of the Participant or his successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect; provided, however, that this Section 5.3 shall not prevent transfers by will or by the applicable laws of descent and distribution. SECTION 5.4 - NOTICES Any notice to be given under the terms of this Agreement to the Company shall be addressed to the Company in care of its Director of Stockholder Relations, and any notice to be given to the Participant shall be addressed to the Participant at the address given beneath his 7 signature hereto. By a notice given pursuant to this Section 5.4, either party may hereafter designate a different address for notices to be given to him. Any notice which is required to be given to the Participant shall, if the Participant is then deceased, be given to the Participant's personal representative if such representative has previously informed the Company of his status and address by written notice under this Section 5.4. Any notice shall be deemed duly given when (i) enclosed in a properly sealed envelope or wrapper addressed as aforesaid, deposited (with postage prepaid) in a post office or branch post office regularly maintained by the United States Postal Service, (ii) upon deposit with a private overnight delivery service guaranteeing next day service, or (iii) upon receipt of a facsimile indicating confirmation of receipt. SECTION 5.5 - TAX WITHHOLDING The Company shall be entitled to require payment or deduction from other compensation payable to the Participant of any sums required by federal, state or local tax law to be withheld with respect to the grant or exercise of the Option or any portion thereof. The Participant may elect to have the Company withhold shares of Common Stock (or allow the return of shares of Common Stock) having a Fair Market Value equal to the sums required to be withheld. If the Participant elects to advance such sums directly, written notice of that election shall be delivered on or prior to such exercise and, whether pursuant to such election or pursuant to a requirement imposed by the Company, payment by check of such sums for taxes shall be delivered within two days after the date of exercise. If the Participant elects to have the Company withhold shares of Common Stock (or allow the return of shares of Common Stock) having a Fair Market Value equal to the sums required to be withheld, the value of the shares of Common Stock to be withheld (or returned as the case may be) will be equal to the Fair Market Value of such shares on the date that the amount of tax to be withheld is to be determined (the "Tax Date"). An election by the Participant to have shares of Common Stock withheld for this purpose will be subject to the following restrictions: (1) the election must be made on or prior to the Tax Date; (2) the election must be irrevocable; (3) the election shall be subject to the disapproval of the Committee; and (4) if the Participant is an officer of the Company within the meaning of Section 16 of the Exchange Act, the election shall be subject to such additional restrictions as the Committee may impose in an effort to secure the benefits of any regulations thereunder. The Committee shall not be obligated to issue shares to the Participant upon exercise of the Option or portion thereof until such payment has been received or shares have been so withheld, unless withholding (or offset against a cash payment) as of or prior to the date of such exercise is sufficient to cover all such sums due or which may be due with respect to such exercise. SECTION 5.6 - LOANS The Committee may, in its discretion, extend one or more loans to the Participant in connection with the exercise or receipt of outstanding Options granted under this Plan. The terms and conditions of any such loan shall be set by the Committee and may include, in the Committee's discretion, loans that are secured, unsecured, recourse or nonrecourse. 8 SECTION 5.7 - COMPLIANCE WITH RULE 16b-3 With respect to persons subject to Section 16 of the Exchange Act, transactions under this Agreement are intended to comply with all applicable conditions of Rule 16b-3 or its successors under the Exchange Act. To the extent any provision of the Plan, this Agreement or action by the Committee fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Committee. SECTION 5.8 - TITLES Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement. SECTION 5.9 - CONSTRUCTION This Agreement shall be administered, interpreted and enforced under the laws of the State of Delaware. IN WITNESS WHEREOF, the parties have caused this Option Agreement to be executed to be effective as of the Date of Grant. M.D.C. HOLDINGS, INC. By:_______________________________ Name:__________________________ Title:_________________________ __________________________________ Employee's Signature __________________________________ Print Name __________________________________ __________________________________ Home Address __________________________________ Social Security Number 9 EX-4.3(C) 4 EXHIBIT 4.3 (C) EXHIBIT 4.3(c) Form of Director Non-Statutory Option M.D.C. HOLDINGS, INC. DIRECTOR EQUITY INCENTIVE PLAN NON-STATUTORY OPTION AGREEMENT THIS AGREEMENT is made on and as of ______________, 19___ (the "Date of Grant") between M.D.C. HOLDINGS, INC., a Delaware corporation (the "Company"), and _______________________ (the "Eligible Director") pursuant to the provisions of the Company's Director Equity Incentive Plan (the "Plan"). The parties hereto agree as follows: ARTICLE I DEFINITIONS Whenever the following terms are used in this Agreement, they shall have the meaning specified below unless the context clearly indicates to the contrary. The masculine pronoun shall include the feminine and neuter, and the singular the plural, where the context so indicates. Capitalized terms not otherwise defined in this Agreement shall have the meaning specified in the Plan. SECTION 1.1 - OPTION "Option" shall mean the non-statutory option to purchase Common Stock, $.01 par value (the "Common Stock"), of the Company granted under this Agreement. SECTION 1.2 - TERMINATION OF DIRECTORSHIP "Termination of Directorship" shall mean the time when the Eligible Director ceases to be a Director of the Company for any reason, with or without cause, including, but not by way of limitation, a termination by resignation, removal, death, retirement or failure to be re-elected by the Company's stockholders. ARTICLE II GRANT OF OPTION SECTION 2.1 - GRANT OF OPTION In consideration of good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, on the date hereof, the Company irrevocably grants to the Eligible Director 1 the option to purchase any part or all of an aggregate of ______ shares of its Common Stock upon the terms and conditions set forth in this Agreement. SECTION 2.2 - PURCHASE PRICE The purchase price of the shares of Common Stock covered by the Option shall be $__________ per share without commission or other charge. (1) SECTION 2.3 - NO RIGHT TO CONTINUED MEMBERSHIP ON THE BOARD Nothing in this Agreement or in the Plan shall confer upon the Eligible Director any right to continue as a Director of the Company or shall interfere with or restrict in any way the rights of the Company and its stockholders, which are hereby expressly reserved, to remove the Eligible Director at any time for any reason whatsoever, with or without good cause. SECTION 2.4 - ADJUSTMENTS IN OPTION In the event that the outstanding shares of the Common Stock subject to the Option are changed into or exchanged for a different number or kind of shares of the Company or other securities of the Company by reason of merger, consolidation, recapitalization, reclassification, stock split-up, stock dividend, combination of shares, rights offering, issuance of warrants or otherwise, the Committee shall make an appropriate and equitable adjustment in the number and kind of shares as to which all outstanding Options, or portions thereof then unexercised, shall be exercisable, to the end that after such event the optionee's proportionate interest shall be maintained as before the occurrence of such event. Such adjustment in an outstanding Option shall be made without change in the total price applicable to the Option or the unexercised portion of the Option (except for any change in the aggregate price resulting from rounding off of share quantities or prices) and with any necessary corresponding adjustment in the Purchase Price per share. ARTICLE III PERIOD OF EXERCISABILITY SECTION 3.1 - COMMENCEMENT OF EXERCISABILITY The Option shall become exercisable six months after the Date of Grant. - ------------------------------------ (1) The purchase price shall be 100% of the Fair Market Value of a share of Common Stock on the Date of Grant. 2 SECTION 3.2 - EXPIRATION OF OPTION The Option may not be exercised to any extent by anyone after the first to occur of the following events: (a) The expiration of five years from the Date of Grant; or (b) The expiration of one year from the date of the Director's Termination of Directorship by reason of the Director's death; or (c) The date of the Director's Termination of Directorship if such Termination of Directorship was for cause as determined by the Board. SECTION 3.3 - ACCELERATION OF EXERCISABILITY (a) Notwithstanding the provisions in Section 7.3 of the Plan, but subject to Sections 3.1, 3.3(c) and 3.3(d) hereof, the Option, or any portion thereof, granted under this Agreement that is not yet exercisable shall become exercisable immediately prior to the occurrence of a merger or consolidation of the Company with or into another corporation, the acquisition by another corporation or person of all or substantially all of the Company's assets or 80% or more of the Company's then outstanding voting stock or the liquidation or dissolution of the Company (each, a "Transaction"). At least ten days prior to the effective date of such Transaction, the Company shall give the Eligible Director holding the Option notice of such event if the Option has not been fully exercised. During this ten-day period, the Director electing to exercise his or her Options shall comply with all of the requirements of Sections 4.3 and 4.4 of this Agreement. In the event that such Transaction becomes effective, the Option so exercised shall be deemed to have been exercised immediately prior to the effective date of such Transaction. In the event that such Transaction fails to transpire, the Director's election under this paragraph shall be of no effect and the Director's Option shall remain subject to the restrictions to which it was originally subject. (b) In the event that a Transaction occurs, the Option, or any portion thereof, that is not exercised prior to the occurrence of a Transaction shall be cancelled, and the Director holding such cancelled Option shall receive in exchange therefor a cash payment equal to the greater of (i) the Fair Market Value (as determined under Section 1.9 of the Plan) of a share of Common Stock measured on the date immediately prior to such Transaction less the per share exercise price set forth in the Director's Option, multiplied by the number of shares of Common Stock purchasable under the Option; or (ii) the fair market value, as determined by the Board, of the cash, securities or other consideration into which a share of Common Stock is to be exchanged pursuant to the Transaction, less 3 the exercise price set forth in the Director's Option, multiplied by the number of shares of Common Stock purchasable under the Option. (c) Notwithstanding the foregoing, Options that are not exercisable on the date of a Transaction shall only become exercisable as described in subsection (a) hereof or cancelled and settled for cash or other consideration as described in subsection (b) hereof to the extent that such exercise and issuance of shares of Common Stock or payment with respect to the Director continues to be deductible by the Company pursuant to Section 280G of the Code. All determinations in applying this Section 3.3 shall be made by the Board, and all such determinations shall be final and binding on the Director, the Company and any interested party. (d) Notwithstanding the foregoing, no such acceleration of exercisability described in subsection (a) hereof or cancellation and settlement described in subsection (b) hereof shall take place if: (i) The Director's Option becomes unexercisable under Section 3.2; or (ii) In connection with a Transaction, provision is made for an assumption of the Director's Option or a substitution therefor of a new Option by the resulting or acquiring corporation or a parent or subsidiary of such corporation under similar terms and conditions as reflected in this Agreement. ARTICLE IV EXERCISE OF OPTION SECTION 4.1 - PERSON ELIGIBLE TO EXERCISE During the lifetime of the Eligible Director, only he may exercise the Option or any portion thereof. After the death of the Eligible Director, any exercisable portion of the Option may, prior to the time when such portion expires or becomes unexercisable under Sections 3.2 or 3.3, be exercised by his personal representative or by any person empowered to do so under the deceased Eligible Director's will or under the then applicable laws of descent and distribution. SECTION 4.2 - PARTIAL EXERCISE Any exercisable portion of the Option or the entire Option, if then wholly exercisable, may be exercised in whole or in part at any time prior to the time when the Option or portion thereof becomes unexercisable under Sections 3.2 or 3.3; provided, however, that each partial exercise shall be for not less than 100 shares and shall be for whole shares only. 4 SECTION 4.3 - MANNER OF EXERCISE The Option, or any exercisable portion thereof, may be exercised solely by delivery to the Director of Stockholder Relations of all of the following prior to the time when the Option or such portion becomes unexercisable under Sections 3.2 or 3.3: (a) Notice in writing signed by the Eligible Director or other person then entitled to exercise the Option or portion, stating that the Option or portion thereof is exercised, such notice complying with all applicable rules established by the Committee and in such form as determined by the Secretary of the Company; and (b) (i) Full payment (by check) for the shares with respect to which the Option or portion is thereby exercised; or (ii) Subject to the Committee's consent, full payment by delivery to the Company of shares of the Common Stock owned by the Eligible Director duly endorsed for transfer to the Company by the Eligible Director or other person entitled to exercise the Option or portion thereof, with a Fair Market Value on the date of delivery equal to the Option price of the shares with respect to which such Option or portion thereof is thereby exercised; or (iii) Any combination of the consideration provided in the foregoing subsections (i) and (ii); and (c) In the event the Option or portion thereof shall be exercised pursuant to Section 4.1 by any person or persons other than the Eligible Director, appropriate proof of the right of such person or persons to exercise the Option or portion thereof. SECTION 4.4 - CONDITIONS TO ISSUANCE OF STOCK CERTIFICATES (a) The Common Stock shall not be issued in respect of the Option granted hereunder unless the exercise of the Option and the issuance and delivery of shares of Common Stock pursuant thereto shall comply with all relevant provisions of law, including the law of the Company's state of incorporation, the Securities Act, the Exchange Act, the rules and regulations thereunder and the requirements of any stock exchange upon which the Common Stock may then be listed, and shall be further subject to the approval of the Company's counsel with respect to such compliance. (b) The Plan, this Agreement and the grant and exercise of the Option to purchase shares of Common Stock hereunder, and the Company's obligation to sell and deliver shares upon the exercise of rights to purchase shares, shall be subject to all applicable federal and state laws, rules and regulations, and to such approvals by any 5 regulatory or governmental agency which may, in the opinion of counsel for the Company, be required. SECTION 4.5 - RIGHTS AS STOCKHOLDER The holder of the Option shall not be, or have any of the rights or privileges of, a stockholder of the Company in respect of any shares purchasable upon the exercise of any part of the Option unless and until certificates representing such shares shall have been issued by the Company to the holder. ARTICLE V OTHER PROVISIONS SECTION 5.1 - ADMINISTRATION The Committee shall have the power to interpret the Plan and this Agreement and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret, amend or revoke any such rules. All actions taken and all interpretations and determinations made by the Committee in good faith shall be final and binding upon the Eligible Director, the Company and all other interested persons. No member of the Committee shall be personally liable for any action, determination or interpretation made in good faith with respect to the Plan or the Option, and all members of the Committee shall be fully protected by the Company with respect to any such action, determination or interpretation. In its absolute discretion, the Board may at any time and from time to time exercise any and all rights and duties of the Committee under the Plan and this Agreement. SECTION 5.2 - OPTION SUBJECT TO TERMS OF PLAN This Option Agreement and the rights of the Eligible Director hereunder are subject to all the terms and conditions of the Plan, as the same may be amended from time to time, as well as to such rules and regulations as the Committee may adopt for administration of the Plan. In the event of any inconsistency between this Option Agreement and the Plan, the Plan shall control. SECTION 5.3 - OPTION NOT TRANSFERABLE Neither the Option nor any interest or right therein or part thereof shall be subject to the debts, contracts or engagements of the Eligible Director or his successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect; 6 provided, however, that this Section 5.3 shall not prevent transfers by will or by the applicable laws of descent and distribution. SECTION 5.4 - NOTICES Any notice to be given under the terms of this Agreement to the Company shall be addressed to the Company in care of its Director of Stockholder Relations, and any notice to be given to the Eligible Director shall be addressed to the director at the address on the signature page hereto. By a notice given pursuant to this Section 5.4, either party may hereafter designate a different address for notices. Any notice which is required to be given to the Eligible Director shall, if the Eligible Director is then deceased, be given to the Eligible Director's personal representative if such representative has previously informed the Company of his status and address by written notice under this Section 5.4. Any notice shall be deemed duly given when enclosed in a properly sealed envelope or wrapper addressed as aforesaid, deposited (with postage prepaid) in a post office or branch post office regularly maintained by the United States Postal Service. SECTION 5.5 - TAX WITHHOLDING The Company shall be entitled to require payment or deduction from other compensation payable to the Eligible Director of any sums required by federal, state or local tax law to be withheld with respect to the Option or any portion thereof. The Eligible Director may elect to have the Company withhold shares of Common Stock (or allow the return of shares of Common Stock) having a Fair Market Value equal to the sums required to be withheld. If the Eligible Director elects to advance such sums directly, written notice of that election shall be delivered on or prior to such exercise and, whether pursuant to such election or pursuant to a requirement imposed by the Company, payment by check of such sums for taxes shall be delivered within two days after the date of exercise. If the Eligible Director elects to have the Company withhold shares of Common Stock (or allow the return of shares of Common Stock) having a Fair Market Value equal to the sums required to be withheld, the value of the shares of Common Stock to be withheld (or returned as the case may be) will be equal to the Fair Market Value of such shares on the date that the amount of tax to be withheld is to be determined (the "Tax Date"). An election by the Eligible Director to have shares of Common Stock withheld for this purpose will be subject to the following restrictions: (1) the election must be made on or prior to the Tax Date; (2) the election must be irrevocable; (3) the election shall be subject to the disapproval of the Committee; and (4) the election shall be subject to such additional restrictions as the Committee may impose in an effort to secure the benefits of any regulations under Section 16 of the Exchange Act. The Committee shall not be obligated to issue shares to the Eligible Director upon exercise of the Option or portion thereof until such payment has been received or shares have been so withheld, unless withholding (or offset against a cash payment) as of or prior to the date of such exercise is sufficient to cover all such sums due or which may be due with respect to such exercise. 7 SECTION 5.6 - COMPLIANCE WITH RULE 16b-3 With respect to persons subject to Section 16 of the Exchange Act, transactions under this Agreement are intended to comply with all applicable conditions of Rule 16b-3 or its successors under the Exchange Act. To the extent any provision of the Plan, this Agreement or action by the Committee fails to so comply, it shall be deemed null and void, to the extent permitted by law, and deemed advisable by the Committee. SECTION 5.7 - TITLES Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement. SECTION 5.8 - CONSTRUCTION This Agreement shall be administered, interpreted and enforced under the laws of the State of Delaware. IN WITNESS WHEREOF, the parties have caused this Option Agreement to be executed as of the Date of Grant. M.D.C. HOLDINGS, INC. By: ________________________________________ Name: __________________________________ Title: _________________________________ Director's Signature (Print Name) Address Taxpayer Identification Number or Social Security Number 8 EX-4.5 5 EXHIBIT 4.5 EXHIBIT 4.5 Non-Qualified Stock Option Agreement, as amended NON-QUALIFIED STOCK OPTION AGREEMENT THIS NON-QUALIFIED STOCK OPTION AGREEMENT (the "Agreement") is made as of the 4th day of February, 1991, between M.D.C. Holdings, Inc., a Delaware corporation (the "Corporation") which, unless the context otherwise requires, shall include the Corporation and its subsidiaries), and David D. Mandarich (the "Consultant"). In accordance with its 1983 Non-Qualified Stock Option Plan, as amended (the "Plan"), the Corporation desires to provide the Consultant, in connection with the services of the Consultant, with an opportunity to acquire shares of the Corporation's Common Stock, $.01 par value (the "Common Stock"), on favorable terms and thereby increase the Consultant's proprietary interest in the continued progress and success of the business of the Corporation. NOW, THEREFORE, in consideration of the mutual covenants herein set forth and other good and valuable consideration, the receipt and sufficiency of which hereby is acknowledged, the Corporation and the Consultant agree as follows: 1. CONFIRMATION OF GRANT OF OPTION. Pursuant to a determination of the Board of Directors of the Corporation (the "Board") made as of February 4, 1991 (the "Date of Grant"), the Corporation, subject to the terms of the Plan and of this Agreement, confirms that the Consultant has been granted on the Date of Grant, as a matter of a separate inducement and agreement and in addition to, and not in lieu of, salary or other compensation for services, the right to purchase (the "Option") an aggregate of 250,000 shares of Common Stock on the terms and conditions herein set forth, subject to adjustment as provided in Section 8 of this Agreement. 2. PURCHASE PRICE. The purchase price of the shares of Common Stock covered by this Option will be $.8125 per share (the "Option Price"), which was the fair market value of share of Common Stock on the Date of Grant. The Option Price is subject to adjustment as provided in Section 8 of this Agreement. 3. EXERCISE OF OPTION. Except, as provided in Sections 6, 7 and 8 of this Agreement, this Option may be exercised as to 1/3 of the number of shares of Common Stock covered hereby commencing on August 5, 1991, as to an additional 1/3 of such number of shares on February 4, 1992 and as to the remaining 1/3 of the number of such shares of Common Stock on February 4, 1993; provided that this Option shall not be exercisable (i) after the expiration of the term of this Option; and (ii) unless the Consultant, at the time of exercise, shall have been employed by the Corporation for a period of a minimum of three months. This Option may be exercised only as to whole shares. This Option may be exercised, as provided in this Section 3, by notice and payment to the Corporation as provided in Sections 10 and 11 of this Agreement. -2- 4. TERM OF OPTION. The term of this Option will be a period of five years from the Date of Grant, subject to earlier termination or cancellation as provided in this Agreement. The holder of this Option will not have any right to dividends or any other right of a stockholder with respect to the shares of Common Stock subject to this Option until such shares shall have been issued to the Consultant upon the exercise of this Option and the consummation of the purchase of such shares (as evidenced by the records of the transfer agent of the Corporation); provided that the date of issue shall not be earlier than the Closing Date (as defined in Section 10 of this Agreement). 5. NON-TRANSFERABILITY OF OPTION. This Option may be exercised during the lifetime of the Consultant only by the Consultant. Without limiting the generality of the foregoing, this Option may not be assigned, transferred or otherwise disposed of, or pledged or hypothecated in any manner (whether by operation of law or otherwise), and shall not be subject to execution, attachment or other process. Any assignment, transfer, pledge, hypothecation or other disposition of this Option or any attempt to make any such levy of execution, attachment or other process will cause this Option to terminate immediately, if the Board, in its sole discretion, so elects at any time thereafter. Written notice of such election by the Board will be given to the Consultant or to the person then entitled to exercise this -3- Option; provided that any such termination of this Option under the provisions of this Section 5 will not prejudice any rights or remedies which the Corporation may have under this Agreement or otherwise. 6. EXERCISE UPON CESSATION OF EMPLOYMENT. If the Consultant ceases to be an employee, officer or director of, or a consultant to the Corporation for any reason whatsoever (except as provided in Section 7 of this Agreement), this Option nonetheless may be exercised at any time prior to the termination of this Option, unless the Consultant is terminated or dismissed for cause, in which case this Option shall terminate immediately. The termination of this Option by reason of cessation of services to the Corporation shall be without prejudice to any right or remedy which the Corporation may have against the holder. 7. EXERCISE UPON DEATH OR DISABILITY. If the Consultant dies, the Consultant's executor, administrator, personal representative or other person entitled by law to the Consultant's rights may exercise this Option (to the extent exercisable on the date of death) at any time within one year after death (but in no event after the Option expires). If the Consultant becomes disabled within the meaning of Section 105(d)(4) of the Code, and this Option has not yet expired, the Consultant may exercise this Option (in full) at any time within one year after leaving the -4- employment of the Corporation (but in no event after this Option expires). 8. ADJUSTMENTS. In the event of a stock dividend, stock split-up, share combination, exchange of shares, recapitalization, merger, consolidation, acquisition or disposition of property or shares, reorganization, liquidation or other similar changes or transactions, of or by the Corporation, the Board shall make (or shall undertake to have the Board of Directors of any corporation which merges with, or acquires the stock or assets of, the Corporation make) such adjustment of the number and class of shares then covered by this Option, or of the Option Price, or both as it, in its sole judgment, shall deem appropriate to give proper effect to such event; provided that no such adjustment shall be made so as to constitute a modification, extension or renewal of this Option within the meaning of that term as set forth in Section 425(h) of the Internal Revenue Code of 1986, as amended (the "Code"), or so as to prevent the Corporation or any other corporation or a subsidiary thereof from being a corporation issuing or assuming this Option in a transaction to which Section 425(a) of the Code applies. 9. REGISTRATION. If the Corporation in its sole discretion so elects, it may register the Common Stock purchasable upon the exercise of this Option under the Securities Act of 1933, as amended (the "Securities Act"). In the absence of such an election, the Consultant understands -5- that neither this Option nor the shares of Common Stock subject thereto and issuable upon the exercise thereof will be registered under the Securities Act and, therefore, will be "restricted securities" as that term is defined in Rule 144 under the Securities Act and the certificates issued to evidence the shares purchased under this Option will bear a legend, substantially as set forth in Section 15 of this Agreement, restricting the transfer thereof. The Consultant hereby represents that this Option is being acquired, and the shares of Common Stock which will be acquired pursuant to the exercise of this Option will be acquired by the Consultant for investment. 10. METHOD OF EXERCISE OF OPTION. Subject to the terms and conditions of this Agreement, this Option will be exercisable by notice and payment to the Corporation in accordance with the procedure set forth in this Section 10. Each such notice shall: (a) state the election of the Consultant to exercise this Option and the number of whole shares of Common Stock in respect of which it is being exercised; (b) contain a representation and agreement as to the Consultant's investment intent with respect to such shares in a form satisfactory to the Corporation's counsel, unless a current Prospectus meeting the requirements of Section 10(a)(3) of the Securities Act is in effect for the shares of Common Stock being purchased pursuant to the exercise of this Option; and -6- (c) be signed by the person or persons entitled to exercise this Option, and if this Option is being exercised other than by the Consultant, be accompanied by proof, satisfactory to counsel for the Corporation, of the right of such person or persons to exercise this Option. Upon receipt of such notice, the Corporation will specify, by written notice to the person or persons exercising this Option, a date and time (the "Closing Date") and place for payment of the full purchase price of such shares. The Closing Date will not be more than 15 days after the date of notice of exercise is received by the Corporation unless another date is agreed upon by the Corporation and the persons exercising this Option or is required upon advice of counsel for the Corporation in order to meet the requirements of Section 12 of this Agreement. Payment of the purchase price for the shares of Common Stock with respect to which this Option shall be exercised will be made by such person or persons at the place specified by the Corporation on or before the Closing Date by delivering to the Corporation a certified or bank cashier's check payable to the order of the Corporation. This Option will be deemed to have been exercised with respect to any particular shares of Common Stock if, and only if, the preceding provisions of this Section 10 and the provisions of Section 12 of this Agreement shall have been complied with, in which event this Option will be deemed to have been exercised on the Closing Date. Notwithstanding anything in -7- this Agreement to the contrary, any notice of exercise given pursuant to the provisions of this Section 10 will be void and of no effect if all the preceding provisions of this Section 10 and the provisions of Section 12 of this Agreement shall not have been complied with. The certificate or certificates for the shares of Common Stock as to which this Option shall be exercised may be registered only in the name of the Consultant (or if the Consultant so requests in the notice exercising this Option, jointly in the name of the Consultant and with a member of the Consultant's family, with right of survivorship) and will be delivered on the Closing Date to the Consultant at the place specified for the closing, but only upon compliance with all of the provisions of this Agreement. 11. NOTICES. Each notice relating to this Agreement must be in writing and delivered in person or by certified mail to the proper address. All notices to the Corporation shall be addressed to it at its office at 3600 South Yosemite Street, Suite 900, Denver, Colorado 80237, Attention: Corporate Secretary. All notices to the Consultant or other person or persons then entitled to exercise this Option shall be addressed to the Consultant or such other person or persons at the Consultant's address below specified. Anyone to whom a notice may be given under this Agreement may designate a new address by notice to that effect. -8- 12. APPROVAL OF COUNSEL. The exercise of this Option and the issuance and delivery of shares of Common Stock pursuant to such exercise shall be subject to approval by the Corporation's counsel of all legal matters in connection therewith, including compliance with the requirements of the Securities Act and the Securities Exchange Act of 1934 and the rules and regulations, respectively, thereunder, and the requirements of any stock exchange upon which the Common Stock may then be listed. 13. RESERVATION OF SHARES. The Corporation, at all times during the term of this Option, shall reserve and keep available such number of shares of the class of stock then subject to this Option as will be sufficient to satisfy the requirements of this Agreement. 14. LIMITATION OF ACTION. The Consultant acknowledges that every right of action accruing to the Consultant and arising out of or in connection with the Plan or this Agreement against the Corporation, irrespective of the place where an action may be brought, will cease and be barred by the expiration of three years from the date of the act or omission in respect of which such right of action is alleged to have arisen. 15. RESALE OF COMMON STOCK. In the absence of an effective Prospectus meeting the requirements of Section 10(a)(3) under the Securities Act, upon any sale or transfer of the Common Stock purchased pursuant to the exercise of this Option, the Consultant shall deliver to the Corporation -9- an opinion of counsel satisfactory to the Corporation to the effect that the sale or transfer of the Common Stock does not violate any provision of the Securities Act or the Securities Exchange Act of 1934, and the certificates for the shares issued upon exercise of this Option will bear, in that event, the following legend: The shares represented by this Certificate have not been registered under the Securities Act of 1933, as amended (the "Act"), and are "restricted securities" as that term is defined in Rule 144 under the Act. The shares may not be offered for sale, sold or otherwise transferred except pursuant to an effective registration statement under the Act or pursuant to an exemption from registration under the Act, the availability of which is to be established to the satisfaction of the Company. 16. BENEFITS OF AGREEMENT. This Agreement will inure to the benefit of, and be binding upon, each successor and assign of the Corporation. All obligations imposed upon the Consultant and all rights granted to the Corporation under this Agreement will be binding upon the Consultant's heirs, legal representatives and successors. 17. GOVERNMENTAL AND OTHER REGULATIONS. The exercise of this Option and the Corporation's obligation to sell and deliver shares upon the exercise of rights to purchase shares is subject to all applicable federal and state laws, rules and regulations, and to such approvals by any regulatory or governmental agency which, in the opinion of counsel for the Corporation, may be required. -10- IN WITNESS WHEREOF, the Corporation has caused this Agreement to be executed in its name by its President or Vice President and its corporate seal to be hereunto affixed and attested by its Secretary or one of its Assistant Secretaries and the Consultant has hereunto set such Consultant's hand and seal, all as of the date first above written. M.D.C. HOLDINGS, INC. By: /s/ Spencer I. Browne [SEAL] ---------------------- Spencer I. Browne, President and Chief Operating Officer /s/ Paris G. Reece III - ---------------------- Paris G. Reece III, Secretary ------------------------- (Signature) ------------------------- ------------------------- (Address of Consultant) -11- AMENDMENT TO NON-QUALIFIED STOCK OPTION AGREEMENT THIS AMENDMENT (the "Amendment") to Non-Qualified Stock Option Agreement (the "Agreement") is made as of the 17th day of June 1994 between M.D.C. Holdings, Inc., a Delaware corporation (the "Corporation") which, unless the context otherwise requires, shall include the Corporation and its subsidiaries, and David D. Mandarich ("Mandarich"). Unless defined herein, capitalized terms used in this Amendment shall have the same meanings ascribed to those terms in the Agreement, a copy of which is attached hereto. The Agreement recites that Mandarich was granted 250,000 Options in accordance with the Company's 1983 Stock Option Plan (the "Plan"). Notwithstanding that recital, the Options were not granted pursuant to the Plan but rather were granted pursuant to the Agreement and the Consulting Agreement dated April 6, 1989 between the Corporation and Mandarich (the "Consulting Agreement"). NOW THEREFORE, in consideration of the mutual covenants herein set forth and other good and valuable consideration the receipt and sufficiency of which hereby are acknowledged, the Corporation and Mandarich agree as follows: 1. Notwithstanding anything in the Agreement to the contrary, the Options were not granted pursuant to the Plan; rather, the Options were granted pursuant to the Agreement and the Consulting Agreement. 2. Notwithstanding Section 1. of this Amendment, if necessary to determine the parties' rights, duties and obligations pursuant to the Agreement, the Corporation and Mandarich agree that the terms of the Plan may be referred to as if the Options had been issued in accordance with the Plan. 3. In the event of a conflict between this Amendment and the Agreement, the terms of this Amendment shall control. Except as amended hereby, all terms, conditions and provisions of the Agreement shall remain in full force and effect. IN WITNESS WHEREOF, the Corporation has caused this Agreement to be executed in its name by its president or vice president and its corporate seal to be hereunto affixed and attested by its secretary or one of its assistant secretaries and Mandarich has hereunto set his hand, all to be effective as of the date first above written. M.D.C. Holdings, Inc. By:________________________________ Spencer I. Browne President and Chief Operating Officer SEAL: ________________________________ Paris G. Reece III Secretary ________________________________ David D. Mandarich EX-5 6 EXHIBIT 5 EXHIBIT 5 Opinion of Daniel S. Japha, Esq. as to legality of securities being registered July 1, 1994 M.D.C. Holdings, Inc. 3600 South Yosemite Street, Suite 900 Denver, CO 80237 Ladies and Gentlemen: M.D.C. Holdings, Inc. (the "Company") has filed with the Securities and Exchange Commission a Registration Statement (the "Registration Statement") on Form S-8 (No. 33- ___), which relates to the registration of 3,154,000 Shares of the $.01 par value, stock of the Company (the "Shares") which may be issued to employees, officers and directors of the Company and its subsidiaries in accordance with the Company's Employee Equity Incentive Plan (the "Employee Plan"), the Company's Director Equity Incentive Plan (the "Director Plan") and in accordance with a Non-Statutory Stock Option (the "Non-Statutory Option") granted by the Company. I have examined such corporate records of the Company and such other documents as I have deemed appropriate to render this opinion. Based on the foregoing, I am of the opinion that the Shares, when sold and issued as contemplated in the Registration Statement and pursuant to the Employee Plan, Director Plan or the Non-Statutory Option, will be legally issued (subject to compliance with applicable federal and state securities laws), fully paid and non-assessable. I hereby consent to the filing of this opinion as Exhibit 5 to the Registration Statement. Yours very truly, Daniel S. Japha General Counsel-Corporate DSJ/df EX-23.1 7 EXHIBIT 23.1 EXHIBIT 23.1 Consent of Price Waterhouse, Certified Public Accountants CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in this Registration Statement on Form S-8 of M.D.C. Holdings, Inc. of our report dated February 10, 1994, which appears on page F-2 of M.D.C. Holdings Inc.'s Annual Report on Form 10-K for the year ended December 31, 1993. /s/ Price Waterhouse PRICE WATERHOUSE Los Angeles, California June 27, 1994 -----END PRIVACY-ENHANCED MESSAGE-----