Exhibit 10.2

 

 

 

M.D.C. HOLDINGS, INC.

 

2011 EQUITY INCENTIVE PLAN

 

(As amended)

 

 

 

 

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Table of Contents

 

Page

 

1

INTRODUCTION

1

 

1.1

Establishment

1

 

1.2

Purpose

1

 

1.3

Effect on Existing Agreements.

1

      2

DEFINITIONS

1

      3

PLAN ADMINISTRATION

7

 

3.1

General

7

 

3.2

Delegation by the Committee

8

 

3.3

Limitations on Authority

8

 

3.4

Deferral Arrangement

8

 

3.5

No Liability

8

 

3.6

Book Entry

8

      4

STOCK SUBJECT TO THE PLAN

9

 

4.1

Number of Shares

9

 

4.2

Individual Award Limits.

9

 

4.3

Share Counting.

9

      5

ELIGIBILITY AND PARTICIPATION

9

      6

STOCK OPTIONS

9

 

6.1

Grant of Options

9

 

6.2

Award Agreement

10

 

6.3

Exercise of Option

10

 

6.4

Termination of Service

11

 

6.5

Limitations on Incentive Stock Options

11

 

6.6

Transferability

11

 

6.7

Family Transfers

12

 

6.8

Rights of Holders of Options

12

      7

STOCK APPRECIATION RIGHTS

12

 

7.1

Grant of Stock Appreciation Rights

12

 

7.2

Award Agreement

12

 

7.3

Exercise of Stock Appreciation Right

13

 

7.4

Effect of Exercise

13

 

7.5

Termination of Service

13

 

7.6

Transferability

13

      8

RESTRICTED STOCK AND RESTRICTED STOCK UNITS

14

 

8.1

Grant of Restricted Stock or Restricted Stock Units

14

 

8.2

Award Agreement

14

 

8.3

Restrictions on Transfer

14

 

8.4

Forfeiture; Other Restrictions

14

 

8.5

Restricted Stock Units

14

 

8.6

Termination of Service

14

 

8.7

Stockholder Privileges

15

 

M.D.C. Holdings, Inc. 2011 Equity Incentive Plan i  

 

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9

QUALIFIED PERFORMANCE BASED COMPENSATION

15

 

9.1

Grant or Vesting of Award Subject to Objective Performance Goals

15

 

9.2

Establishment of Performance Goals

15

 

9.3

Achievement of Performance Goals

16

 

9.4

Committee to Comply with Section 162(m)

16

      10

OTHER STOCK-BASED AWARDS

16

      11

DIVIDENDS AND DIVIDEND EQUIVALENTS

16

      12

TAX WITHHOLDING

16

      13

PARACHUTE LIMITATIONS

17

      14

EFFECT OF CHANGES IN CAPITALIZATION

18

 

14.1

Changes in Stock

18

 

14.2

Change of Control

18

 

14.3

Reorganization in Which the Company Is the Surviving Entity and in Which No
Change of Control Occurs

19

 

14.4

Adjustment

19

 

14.5

No Limitations on the Company

19

      15

REQUIREMENTS OF LAW

20

 

15.1

General

20

 

15.2

Rule 16b-3

20

      16

GENERAL PROVISIONS

20

 

16.1

Disclaimer of Rights

20

 

16.2

Nontransferability of Awards

21

 

16.3

Changes in Accounting or Tax Rules

21

 

16.4

Nonexclusivity of the Plan

21

 

16.5

Captions

21

 

16.6

Other Award Agreement Provisions

21

 

16.7

Other Employee Benefits

21

 

16.8

Severability

22

 

16.9

Governing Law

22

 

16.10

Section 409A

22

      17

AMENDMENT, MODIFICATION AND TERMINATION

22

 

17.1

Amendment, Modification, and Termination

22

 

17.2

Awards Previously Granted

22

      18

STOCKHOLDER APPROVAL; EFFECTIVE DATE OF PLAN

23

      19

DURATION

23

      20

EXECUTION

24

 

M.D.C. Holdings, Inc. 2011 Equity Incentive Plan ii  

 

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M.D.C. HOLDINGS, INC.

 

2011 EQUITY INCENTIVE PLAN

 

 

 

1

INTRODUCTION

 

1.1     Establishment. M.D.C. Holdings, Inc., a Delaware corporation (the
“Company”), hereby establishes the M.D.C. Holdings, Inc. 2011 Equity Incentive
Plan (the “Plan”). The Plan permits the grant of incentive stock options,
non-qualified stock options, stock appreciation rights, restricted stock,
restricted stock units, and other stock-based and cash awards in accordance with
the terms hereof.

 

1.2     Purpose. The Plan is intended to enhance the Company’s and its
Affiliates’ (as defined herein) ability to attract and retain highly qualified
officers, key employees, and other persons, and to motivate such persons to
serve the Company and its Affiliates and to expend maximum effort to improve the
business results and earnings of the Company, by providing to such persons an
opportunity to acquire or increase a direct proprietary interest in the
operations and future success of the Company.

 

1.3     Effect on Existing Agreements. Nothing in the Plan is intended to
abrogate the rights of any Participant under any contract or agreement existing
between the Participant and the Company, or any subsequent amendments or
modifications of such contract or agreement, and all Awards granted under the
Plan and actions taken with respect to the Plan shall be subject to the terms of
any contract or agreement between the Participant and the Company.

 

2

DEFINITIONS

 

For purposes of interpreting the Plan and related documents (including Award
Agreements), the following definitions shall apply:

 

2.1     “Affiliate” means with respect to the Company, (i) any company or other
trade or business that controls, is controlled by or is under common control
with the Company within the meaning of Rule 405 of Regulation C under the
Securities Act, including without limitation, any Subsidiary, and (ii) any
corporation or other entity controlling, controlled by, or under common control
with the Company, including any member of an affiliated group of which the
Company is a common parent corporation or subsidiary corporation (within the
meaning of Section 424 of the Code).

 

2.2     “Award” means a grant under the Plan of an Option, Stock Appreciation
Right, Restricted Stock, Restricted Stock Unit, or Other Stock-Based Award.

 

2.3     “Award Agreement” means the written or electronic agreement setting
forth the terms and conditions applicable to each Award. The Award Agreement is
subject to the terms and conditions of the Plan. In the event of any
inconsistency between the provisions of the Plan and any Award Agreement, the
provisions of the Plan shall govern, except to the extent the Plan would be
considered to provide an additional benefit as determined under Sections 409A
and 424 of the Code.

 

M.D.C. Holdings, Inc. 2011 Equity Incentive Plan    

 

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2.4     “Benefit Arrangement” means as defined in Section 13.

 

2.5     “Board” or “Board of Directors” means the board of directors of M.D.C.
Holdings, Inc.

 

2.6     “Business Combination” means as defined in Section 2.8.

 

2.7     “Cause” means, as determined by the Committee and unless otherwise
provided in an employment, consulting or other services agreement, if any,
between the Employee and the Company or an Affiliate, (i) any willful breach of
any material written policy of the Company or an Affiliate that is materially
detrimental to the Company or the Affiliate; (ii) engaging in any conduct
involving moral turpitude that is materially detrimental to the Company or an
Affiliate, including, but not limited to, misappropriation or conversion of
assets of the Company or an Affiliate (other than immaterial assets); (iii) a
conviction of or entry of a plea of nolo contendere to a felony; or (iv) a
material breach by the Employee of any term of any employment, consulting or
other services, confidentiality, intellectual property or non-competition
agreements, if any, between the Employee and the Company or an Affiliate. No act
or failure to act by the Employee shall be deemed “willful” if done, or omitted
to be done, by him or her in good faith and with the reasonable belief that his
or her action or omission was in the best interest of the Company or an
Affiliate.

 

2.8     “Change of Control” means and shall be deemed to have occurred upon the
occurrence of:

 

(a)      the acquisition by any individual, entity, or group (within the meaning
of Sections 13(d)(3) or 14(d)(2) of the Exchange Act (a “Person”) of “beneficial
ownership” (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of more than 50% of the combined voting power of the Company’s then outstanding
securities entitled to vote generally in the election of directors;

 

(b)      the individual directors of the Board as of the Effective Date (the
“Incumbent Directors”) cease to constitute at least half of the Board within a
twelve-month period; provided, however, that for purposes of this paragraph, any
new director whose election by the Board or nomination for election by the
Company’s stockholders was approved by a vote of at least a of two-thirds of the
Incumbent Directors at the beginning of such twelve-month period shall be
considered an Incumbent Director;

 

(c)      consummation, in one transaction or a series of related transactions,
of a reorganization, merger, or consolidation of the Company or sale or other
disposition, direct or indirect, of all or substantially all of the assets of
the Company (a “Business Combination”), in each case, unless, following such
Business Combination, the Persons who were the “beneficial owners” of
outstanding voting securities of the Company immediately prior to such Business
Combination “beneficially own,” by reason of such ownership of the Company’s
voting securities immediately before the Business Combination, more than 50% of
the combined voting power of the company resulting from such Business
Combination (including, without limitation, a company which as a result of such
transaction owns the Company or all or substantially all of the Company’s assets
either directly or through one or more subsidiaries) in substantially the same
proportions as their ownership of the outstanding voting securities of the
Company immediately prior to such Business Combination; or

 

(d)      approval by those Persons holding the voting securities of the Company
of a complete liquidation or dissolution of the Company.

 

M.D.C. Holdings, Inc. 2011 Equity Incentive Plan 2  

 

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Notwithstanding the foregoing, solely with respect to any Award that is subject
to Section 409A of the Code and payable upon a Change of Control, the term
“Change of Control” shall mean an event described in one or more of the
foregoing provisions of this definition, but only if it also constitutes a
“change in control event” within the meaning of Treas. Reg. Section
1.409A-3(i)(5).

 

2.9     “Code” means the Internal Revenue Code of 1986, as amended, and the
regulations, interpretations, and administrative guidance issued thereunder.

 

2.10     “Committee” means the Compensation Committee of the Board or any
committee designated by the Board to administer the Plan. The Compensation
Committee or the Board may designate one or more subcommittees to (i) consist
solely of persons who satisfy the applicable requirements of any stock exchange
or national market system on which the shares of Stock may be listed, (ii)
consist solely of persons who qualify as an “outside director” within the
meaning of Section 162(m) of the Code, and (iii) consist solely of persons who
qualify as a “non-employee director” within the meaning of Rule 16b-3
promulgated under the Exchange Act. Notwithstanding the foregoing, the
Compensation Committee or the Board may also designate one or more subcommittees
that consist of persons appointed in the discretion of the Compensation
Committee or the Board who are not described in (i), (ii) or (iii) of the
preceding sentence.

 

2.11     “Company” means M.D.C. Holdings, Inc., a Delaware corporation.

 

2.12     “Corporate Event” means an event described in Section 14.1.

 

2.13     “Disabled” or “Disability” means, unless otherwise provided in an
employment, consulting or other services agreement, if any, between the
Participant and the Company or an Affiliate, the Participant is unable to
perform each of the essential duties of such Participant’s position by reason of
a medically determinable physical or mental impairment which is potentially
permanent in character or which can be expected to last for a continuous period
of not less than 12 months; provided that, the following shall apply:

 

(a)     With respect to rules regarding expiration of an Incentive Stock Option
following termination of the Participant’s Service, Disability has the meaning
set forth in Section 22(e)(3) of the Code.

 

(b)     With respect to any Award subject to Section 409A of the Code, the
Participant is: (i) unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment that can be
expected to result in death or can be expected to last for a continuous period
of not less than 12 months; (ii) by reason of any medically determinable
physical or mental impairment that can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months, is
receiving income replacement benefits for a period of not less than three months
under an accident or health plan covering employees of the Participant’s
employer; or (iii) determined to be totally disabled by the Social Security
Administration.

 

M.D.C. Holdings, Inc. 2011 Equity Incentive Plan 3  

 

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2.14     “Dividend Equivalent” means a right granted under Section 11.

 

2.15     “Effective Date” means the effective date of the Plan, which is the
date the Plan was approved by the stockholders of the Company, and no Awards may
be granted under the Plan after it has been in effect for ten years.

 

2.16     “Employee” means any individual who is a common-law employee of the
Company or an Affiliate determined in accordance with the Company’s standard
personnel policies and practices.

 

2.17     “Exchange Act” means the U.S. Securities Exchange Act of 1934, as it
may be amended from time to time, or any successor act thereto.

 

2.18     “Exercise Price” means the price at which a share of Stock may be
purchased pursuant to the exercise of an Option.

 

2.19     “Fair Market Value” means the value of a share of Stock as of a
particular day, determined as follows: (a) the closing sale price reported for
such share on the national securities exchange or national market system on
which such stock is principally traded, or if no sale of shares is reported for
such day, on the next preceding day on which a sale was reported, or (b) if the
shares of Stock are not then listed on a national securities exchange or
national market system, or the value of such shares is not otherwise
determinable, such value as determined by the Committee in good faith in its
sole discretion consistent with the requirements under Section 409A of the Code.

 

2.20     “Family Member” means a person who is a spouse, former spouse, child,
stepchild, grandchild, parent, stepparent, grandparent, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother, sister,
brother-in-law, or sister-in-law, including adoptive relationships, of the
Participant, a trust in which any one or more of these persons (or the
Participant) in the aggregate have more than fifty percent (50%) of the
beneficial interest, a foundation in which any one or more of these persons (or
the Participant) in the aggregate control the management of assets, and any
other entity in which one or more of these persons (or the Participant) in the
aggregate own more than fifty percent (50%) of the voting interests; provided,
however, that to the extent required by applicable law, the term Family Member
shall be limited to a person who is a spouse, former spouse, child, stepchild,
grandchild, parent, stepparent, grandparent, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother, sister, brother-in-law, or sister-in-law,
including adoptive relationships, of the Participant or a trust or foundation
for the benefit of any one or more of these persons.

 

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2.21     “Good Reason” means, unless otherwise provided in an employment,
consulting or other services agreement, if any, between the Employee and the
Company or an Affiliate, (i) a material reduction in the Participant’s base
salary, (ii) a material diminution of the Participant’s title, office, position
or authority, excluding for this purpose an action not taken in bad faith and
which is remedied within twenty (20) days after receipt of written notice
thereof given by the Participant, (iii) the assignment to the Employee of any
duties inconsistent with the Participant’s position (including status or
reporting requirements), authority, or material responsibilities, or the removal
of the Employee’s authority or material responsibilities, excluding for this
purpose an action not taken in bad faith and which is remedied by the Company
within twenty (20) days after receipt of notice thereof given by the
Participant, (iv) a transfer of the Participant’s primary workplace by more than
fifty (50) miles from the current workplace, or (v) a material breach of any
term of any employment, consulting or other services agreement, if any, between
the Employee and the Company or an Affiliate by the Company which is not
remedied within twenty (20) days after receipt of written notice thereof given
by the Participant.

 

2.22     “Grant Date” means, as determined by the Committee, the latest to occur
of (i) the date on which the Committee approves an Award, (ii) the date on which
the recipient of an Award first becomes eligible to receive an Award under
Section 5, or (iii) such other date as may be specified by the Committee in the
Award Agreement.

 

2.23     “Grant Price” means the per share exercise price of a Stock
Appreciation Right granted to a Participant under Section 7.

 

2.24     “Incentive Stock Option” means an Option to purchase shares of Stock
designated as an Incentive Stock Option that is intended to meet the
requirements of Section 422 of the Code.

 

2.25     “Incumbent Directors” means as defined in Section 2.8.

 

2.26     “Minimum Statutory Withholding” means as defined in Section 12.

 

2.27     “Non-Qualified Stock Option” means any Option other than an Incentive
Stock Option.

 

2.28     “Option” means an option to purchase one or more shares of Stock at a
stated or formula price for a specified period of time. An Option granted under
the Plan shall be either an Incentive Stock Option or a Non-Qualified Stock
Option.

 

2.29     “Other Agreement” means as defined in Section 13.

 

2.30     “Other Stock-Based Award” means an Award that is granted to a
Participant under Section 10.

 

2.31     “Parachute Payment” means as defined in Section 13.

 

2.32     “Participant” means any eligible Employee who at the sole discretion of
the Committee is granted an Award under the Plan.

 

2.33     “Person” means as defined in Section 2.8.

 

M.D.C. Holdings, Inc. 2011 Equity Incentive Plan 5  

 

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2.34     “Plan” means this M.D.C. Holdings, Inc. 2011 Equity Incentive Plan, as
amended from time to time.

 

2.35     “Restricted Stock” means an Award of shares of Stock granted under
Section 8.

 

2.36     “Restricted Stock Unit” or “RSU” means a bookkeeping entry representing
the equivalent of shares of Stock granted under Section 8.

 

2.37     “Restriction Period” means the period during which Restricted Stock and
Restricted Stock Units are subject to a substantial risk of forfeiture (based
upon the passage of time, the achievement of performance goals or upon the
occurrence of other events as determined by the Committee, in its discretion),
as provided in Sections 8.3 and 8.4.

 

2.38     “Securities Act” means the U.S. Securities Act of 1933, as it may be
amended from time to time, or any successor act thereto.

 

2.39     “Service” means service as an Employee of the Company or an Affiliate.
Unless otherwise stated in the applicable Award Agreement, a Participant’s
change in position or duties shall not result in interrupted or terminated
Service, so long as such Participant continues to be a Employee of the Company
or an Affiliate. Subject to the preceding sentence, whether a termination of
Service shall have occurred for purposes of the Plan shall be determined by the
Committee, which determination shall be final, binding and conclusive.
Notwithstanding the foregoing, solely with respect to any Award that is subject
to Section 409A of the Code and payable upon a termination of Service, a
Participant shall be considered to have terminated Service with the Company or
an Affiliate only when the Participant incurs a “separation from service” with
respect to the Company or an Affiliate within the meaning of Section
409A(a)(2)(A)(i) of the Code.

 

2.40     “Stock” or “Common Stock” means a share of M.D.C. Holdings, Inc.,
common stock, $0.01 par value per share.

 

2.41     “Stock Appreciation Right” or “SAR” means an Award granted under
Section 7.

 

2.42     “Subsidiary” means any “subsidiary corporation” of the Company within
the meaning of Section 424(f) of the Code.

 

2.43     “Substitute Awards” means Awards granted in substitution for, or in
assumption of, outstanding awards previously granted by an entity acquired by
the Company or a Subsidiary or an Affiliate or with which the Company or
Subsidiary or Affiliate combines. The terms and conditions of any Substituted
Awards shall comply with the requirements for substitutions of awards made in
connection with a corporate transaction or certain other adjustments that are
not treated as modifications under Treas. Reg. Section 1.424-1 and Section 409A
of the Code, as applicable.

 

M.D.C. Holdings, Inc. 2011 Equity Incentive Plan 6  

 

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3

PLAN ADMINISTRATION

 

3.1     General.  The Plan shall be administered by the Committee, which shall
have full power and authority to take all actions and to make all determinations
as are required or permitted under the Plan. In accordance with the provisions
of the Plan, the Committee shall, in its sole discretion, select the
Participants from among the eligible individuals described in Section 5,
determine the Awards to be made pursuant to the Plan, or shares of Stock to be
issued thereunder and the time at which such Awards are to be made, fix the
Option Price (or Grant Price), period and manner in which an Option (or Stock
Appreciation Right) becomes exercisable, establish the duration and nature of
Restricted Stock or Restricted Stock Unit restrictions, establish the terms and
conditions applicable to, and establish such other terms and requirements of the
various compensation incentives under the Plan as the Committee may deem
necessary or desirable and consistent with the terms of the Plan. The Committee
shall determine the form of the Award Agreements with Participants that shall
evidence the particular provisions, terms, conditions, rights and duties of the
Company and the Participants with respect to Awards granted pursuant to the
Plan, which provisions need not be identical except as may be provided herein.
The Committee may amend, modify, or supplement the terms of any outstanding
Award including, but not limited to, amending an Award or exercising discretion
under an Award or under the Plan to: (i) accelerate the date on which an Award
becomes vested, exercisable, or transferable, (ii) extend the term of any Award,
including the period following the termination of the Participant’s Service to
the Company during which the Award shall remain outstanding, (iii) waive any
conditions with regard to vesting, exercisability, or transferability of an
Award, and (iv) recognize differences in local law, tax policy, or custom with
regard to Awards made to foreign nations or individuals who are employed outside
the United States. Notwithstanding the foregoing, no amendment or modification
may be made to an outstanding Option or Stock Appreciation Right that (i) causes
the Option or Stock Appreciation Right to become subject to Section 409A of the
Code, (ii) reduces the Exercise Price or Grant Price, either by lowering the
Exercise Price or Grant Price or by canceling the outstanding Option or Stock
Appreciation Right and granting a replacement Option or Stock Appreciation Right
with a lower Exercise Price or Grant Price, or (iii) would be treated as a
repricing under the rules of the exchange upon which shares of Stock of the
Company trade, without, with respect to item (i), the Participant’s written
prior approval, and with respect to items (ii) and (iii), without the approval
of the stockholders of the Company, provided, that appropriate adjustments may
be made to outstanding Options and Stock Appreciation Rights pursuant to Section
14.

 

As a condition to any Award, the Committee shall have the right, at its
discretion, to require Participants to return to the Company Awards previously
granted under the Plan. Subject to the terms and conditions of the Plan, any
such subsequent Award shall be upon such terms and conditions as are specified
by the Committee at the time the new Award is granted. The Company may retain
the right in an Award Agreement to cause a forfeiture of the gain realized by a
Participant on account of actions taken by the Participant in violation or
breach of or in conflict with any non-competition agreement, any agreement
prohibiting solicitation of employees or clients of the Company or any Affiliate
thereof or any confidentiality obligation with respect to the Company or any
Affiliate thereof or otherwise in competition with the Company or any Affiliate
thereof, to the extent specified in such Award Agreement applicable to the
Participant. Furthermore, the Committee may annul an Award if the Participant is
an employee of the Company or an Affiliate thereof and is terminated for Cause
as defined in the applicable Award Agreement or the Plan, as applicable.

 

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The Committee may from time to time adopt such rules and regulations for
carrying out the purposes of the Plan as it may deem proper and in the best
interests of the Company. The Committee may correct any defect, supply any
omission or reconcile any inconsistency in the Plan or in any Award Agreement
entered into hereunder in the manner and to the extent it shall deem expedient
and it shall be the sole and final judge of such expediency. The determinations,
interpretations and other actions of the Committee pursuant to the provisions of
the Plan shall be binding and conclusive for all purposes and on all persons.

 

3.2     Delegation by the Committee. The Committee may, from time to time,
delegate, to specified officers of the Company, the power and authority to grant
or document Awards under the Plan to specified groups of eligible individuals,
subject to such restrictions and conditions as the Committee, in its sole
discretion, may impose. The delegation shall be as broad or as narrow as the
Committee shall determine. To the extent that the Committee has delegated the
authority to determine certain terms and conditions of an Award, all references
in the Plan to the Committee’s exercise of authority in determining such terms
and conditions shall be construed to include the officer or officers to whom the
Committee has delegated the power and authority to make such determination.
However, any delegation (a) shall not result in the loss of an exemption under
Rule 16b-3(d) for Awards granted to Participants subject to Section 16 of the
Exchange Act in respect of the Company, and there shall be no delegation of
authority to grant awards to any Section 16 person, (b) will not cause Awards
intended to qualify as “performance-based” compensation under Code
Section 162(m) to fail to so qualify, (c) will not result in a related-person
transaction with an executive officer required to be disclosed under Item 404(a)
of Regulation S-K (in accordance with Instruction 5.a.ii thereunder) under the
Exchange Act and (d) shall be permitted under Section 157 and other applicable
provisions of the Delaware General Corporation Law.

 

3.3     Limitations on Authority. The Committee shall, in exercising its
discretion under the Plan, comply with all contractual and legal obligations of
the Company or the Committee in effect from time to time, whether contained in
the Company’s charter, bylaws, or other binding contract, or in the Compensation
Committee’s charter, or in applicable law.

 

3.4     Deferral Arrangement. The Committee may permit or require the deferral
of any Award payment into a deferred compensation arrangement, subject to such
rules and procedures as it may establish in accordance with Section 409A of the
Code, which may include provisions for the payment or crediting of interest or
Dividend Equivalents, including converting such credits into deferred Stock
units.

 

3.5     No Liability. No member of the Board or of the Committee shall be liable
for any action or determination made in good faith with respect to the Plan, any
Award or any Award Agreement.

 

3.6     Book Entry. Notwithstanding any other provision of this Plan to the
contrary, the Company may elect to satisfy any requirement under this Plan for
the delivery of stock certificates through the use of electronic or other forms
of book-entry including, but not limited to, uncertificated forms maintained
electronically.

 

M.D.C. Holdings, Inc. 2011 Equity Incentive Plan 8  

 

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4

STOCK SUBJECT TO THE PLAN

 

4.1     Number of Shares. Subject to adjustment as provided in Section 14, the
maximum number of shares of Stock available for issuance under the Plan shall be
9,568,478 shares. Subject to adjustment as provided in Section 14, 9,568,478
shares of Stock available for issuance under the Plan shall be available for
issuance pursuant to Incentive Stock Options. Such maximum numbers may be
increased from time to time by approval of the Board and by the stockholders of
the Company if, in the opinion of counsel for the Company, stockholder approval
is required. Stock issued or to be issued under the Plan shall be authorized but
unissued shares; or, to the extent permitted by applicable law, issued shares
that have been reacquired by the Company.

 

4.2     Individual Award Limits. Subject to adjustment as provided in
Section 14, the maximum number or value of shares of Stock that may be covered
by an Award granted under the Plan (other than Substitute Awards) to a single
Participant in any calendar year shall not exceed the shares of Stock available
for issuance under the Plan under Section 4.1.

 

 

4.3     Share Counting. The Committee may adopt reasonable counting procedures
to ensure appropriate counting, avoid double counting (as, for example, in the
case of tandem Awards) and make adjustments in accordance with Section 14. If
the Exercise Price of any Option granted under the Plan, or if pursuant to
Section 12 the tax withholding obligation of any Participant with respect to an
Option or other Award, is satisfied by tendering shares of Stock to the Company
or by withholding shares of Stock, the number of shares of Stock issued net of
the shares of Stock tendered or withheld shall be deemed delivered for purposes
of determining the maximum number of shares of Stock available for delivery
under the Plan. To the extent that an Award under the Plan is canceled, expired,
forfeited, settled in cash, settled by issuance of fewer shares than the number
underlying the Award, or otherwise terminated without delivery of shares to the
Participant, the shares of Stock retained or returned to the Company will also
be available under the Plan.

 

5

ELIGIBILITY AND PARTICIPATION

 

Subject to the provisions of this Plan, the Committee may, from time to time,
select from all Employees of the Company or an Affiliate to whom Awards shall be
granted; provided, however, to the extent required under Section 409A of the
Code, an Affiliate of the Company shall include only an entity in which the
Company possesses at least twenty percent (20%) of the total combined voting
power of the entity’s outstanding voting securities or such other threshold
ownership percentage permitted or required under Section 409A of the Code. An
Employee may receive more than one Award, subject to such restrictions as are
provided herein.

 

6

STOCK OPTIONS

 

6.1     Grant of Options. Subject to the provisions of this Plan, Options may be
granted to Participants in such number, and upon such terms, and at any time and
from time to time as shall be determined by the Committee, it its sole
discretion; provided that Incentive Stock Options may be granted only to
eligible Employees of the Company or of any parent corporation or subsidiary
corporation (as permitted by Section 422 of the Code).

 

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6.2     Award Agreement. Each Option granted under the Plan shall be evidenced
by an Award Agreement that shall specify the Exercise Price, the number of
shares of Stock covered by the Option, the maximum term of the Option, the
conditions upon which an Option shall become vested and exercisable and such
other provisions as the Committee shall determine, consistent with the terms of
the Plan. The Award Agreement shall specify whether the Option is intended to be
an Incentive Stock Option or a Non-Qualified Stock Option.

 

(a)     Exercise Price. The Exercise Price for each Option shall be as
determined by the Committee and shall be specified in the Award Agreement. The
Exercise Price shall be: not less than one hundred percent (100%) of the Fair
Market Value of a share of Stock on the Grant Date; provided, however, that the
foregoing minimum Exercise Price shall not apply to Substitute Awards. In no
case shall the Exercise Price of any Option be less than the par value of a
share of Stock.

 

(b)     Number of Shares. Each Award Agreement shall state that it covers a
specified number of shares of Stock, as determined by the Committee.

 

(c)     Term. Each Option shall terminate as set forth in the Award Agreement
and all rights to purchase shares of Stock shall expire at such time as the
Committee shall determine at the time of grant; provided, however, no Option
shall be exercisable later than the tenth (10th) anniversary of the Grant Date.

 

(d)     Restrictions on Exercise. The Award Agreement shall set forth any
installment or other restrictions on exercise of the Option during the term of
the Option. Each Option shall become exercisable and shall vest over such period
of time, or upon such events, as determined by the Committee.

 

6.3     Exercise of Option.

 

(a)     Manner of Exercise. An Option granted hereunder shall be exercised, in
whole or in part, by providing written or electronic notice, on a form provided
by the Company, to an employee as designated by the Company, specifying the
number of shares of Stock to be purchased and accompanied by full payment of the
Exercise Price for the shares and satisfaction of any tax withholding
requirements.

 

(b)     Payment. A condition to the issuance or other delivery of shares of
Stock as to which an Option shall be exercised shall be the payment of the
Exercise Price and satisfaction of any tax withholding requirements. The
Exercise Price of an Option shall be payable to the Company in full, in any
method permitted under the Award Agreement, including: (i) in cash or in cash
equivalents acceptable to the Company; (ii) by tendering unrestricted shares of
Stock already owned by the Participant (for at least six (6) months or such
other period as may be required by the Committee in order to comply with
applicable law and to avoid adverse accounting consequences) on the date of
surrender to the extent the shares of Stock have a Fair Market Value on the date
of surrender equal to the aggregate Exercise Price of the shares as to which
such Option shall be exercised, provided that, in the case of an Incentive Stock
Option, the right to make payment in the form of already owned shares of Stock
may be authorized only at the time of grant, (iii) any other method approved or
accepted by the Committee in its sole discretion, including, but not limited to
a cashless (broker-assisted) exercise (although limitations might apply to
certain executive officers), or (iv) any combination of the foregoing. Unless
otherwise determined by the Committee, all payments under all of the methods
indicated above shall be paid in United States dollars.

 

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(c)     Delivery of Shares. Promptly after the exercise of an Option by a
Participant and the payment in full of the Exercise Price, such Participant
shall be entitled to the issuance of certificates evidencing such Participant’s
ownership of the shares of Stock purchased upon exercise of the Option.
Notwithstanding any other provision of this Plan to the contrary, the Company
may elect to satisfy any requirement under this Plan for the delivery of
certificates through the use of electronic or other forms of book-entry.

 

6.4     Termination of Service. Each Award Agreement shall set forth the extent
to which the Participant shall have the right to exercise the Option following
termination of the Participant’s Service. Such provisions shall be determined in
the sole discretion of the Committee, need not be uniform among all Options
issued pursuant to the Plan, and may reflect distinctions based on the reasons
for termination of Service.

 

6.5     Limitations on Incentive Stock Options.

 

(a)     Initial Exercise. The aggregate Fair Market Value of the shares of Stock
with respect to which Incentive Stock Options are exercisable for the first time
by a Participant in any calendar year, under the Plan or otherwise, shall not
exceed $100,000. For this purpose, the Fair Market Value of the shares of Stock
shall be determined as of the Grant Date and each Incentive Stock Option shall
be taken into account in the order granted.

 

(b)     Ten Percent Stockholders. An Incentive Stock Option granted to a
Participant who is the holder of record of more than ten percent (10%) of the
combined voting power of all classes of stock of the Company shall have an
Exercise Price at least equal to one hundred and ten percent (110%) of the Fair
Market Value of a share of Stock on the Grant Date of the Option and the term of
the Option shall not exceed five (5) years.

 

(c)     Notification of Disqualifying Disposition. If any Participant shall make
any disposition of shares of Stock acquired pursuant to the exercise of an
Incentive Stock Option under the circumstances described in Section 421(b) of
the Code (relating to certain disqualifying dispositions), the Participant shall
notify the Company of such disposition within ten (10) days thereof.

 

(d)     Limitations on Exercise. No Incentive Stock Option shall be exercisable
as an Incentive Stock Option more than three (3) months after the Participant
ceases to be an Employee for any reason other than death or Disability, or more
than one (1) year after the Participant ceases to be an Employee due to death or
Disability.

 

6.6     Transferability. Except as provided in Section 6.7, during the lifetime
of a Participant, only the Participant (or, in the event of legal incapacity or
incompetency, the Participant’s guardian or legal representative) may exercise
an Option. Except as provided in Section 6.7, no Option shall be assignable or
transferable by the Participant to whom it is granted, other than by will or the
laws of descent and distribution.

 

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6.7     Family Transfers. If authorized in the applicable Award Agreement, a
Participant may transfer, not for value, all or part of an Option to any Family
Member. For the purpose of this Section 6.7, a “not for value” transfer is a
transfer which is (i) a gift, (ii) a transfer under a domestic relations order
in settlement of marital property rights; or (iii) unless applicable law does
not permit such transfers, a transfer to an entity in which more than fifty
percent (50%) of the voting interests are owned by Family Members (or the
Participant) in exchange for an interest in that entity. Following a transfer
under this Section 6.7, any such Option shall continue to be subject to the same
terms and conditions as were applicable immediately prior to transfer.
Subsequent transfers of transferred Options are prohibited except to Family
Members of the original Participant in accordance with this Section 6.7 or by
will or the laws of descent and distribution. The events of termination of
Service under an Option shall continue to be applied with respect to the
original Participant, following which the Option shall be exercisable by the
transferee only to the extent, and for the periods specified in the applicable
Award Agreement.

 

6.8     Rights of Holders of Options. Unless otherwise stated in the applicable
Award Agreement, an individual holding or exercising an Option shall have none
of the rights of a stockholder of the Company (for example, the right to receive
cash or dividend payments or distributions attributable to the subject shares of
Stock or to direct the voting of the shares of Stock) until the shares of Stock
covered thereby are fully paid and issued to such individual. Except as provided
in Section 14 hereof, no adjustment shall be made for dividends, distributions
or other rights for which the record date is prior to the date of such issuance.

 

7

STOCK APPRECIATION RIGHTS

 

7.1     Grant of Stock Appreciation Rights. Subject to the provisions of this
Plan, Stock Appreciation Rights may be granted to Participants at any time and
from time to time as shall be determined by the Committee. The Committee may
grant freestanding Stock Appreciation Rights, Stock Appreciation Rights that are
granted in tandem with an Option, or any combination thereof.

 

7.2     Award Agreement. Each Stock Appreciation Right shall be evidenced by an
Award Agreement that shall specify the Grant Price, the number of shares of
Stock covered by the Stock Appreciation Right, the maximum duration of the Stock
Appreciation Right, the conditions upon which the Stock Appreciation Right shall
become vested and exercisable and such other provisions as the Committee shall
determine, consistent with the terms of the Plan.

 

(a)     Grant Price. The Grant Price for each Stock Appreciation Right shall be
determined by the Committee and shall be specified in the Award Agreement. Other
than with respect to Substitute Awards, the Grant Price shall not be less than
one hundred percent (100%) of the Fair Market Value of a share of Stock on the
Grant Date of the Stock Appreciation Right.

 

(b)     Number of Shares. Each Award Agreement shall state that it covers a
specified number of shares of Stock, as determined by the Committee.

 

(c)     Term. Each Stock Appreciation Right shall terminate and all rights with
respect to the Stock Appreciation Right shall expire at such time as the
Committee shall determine at the time of grant; provided, however, no Stock
Appreciation Rights shall be exercisable later than the tenth (10th) anniversary
of the Grant Date.

 

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(d)     Restrictions on Exercise. The Award Agreement shall set forth any
installment or other restrictions on exercise of the Stock Appreciation Right
during its term. Each Stock Appreciation Right shall become exercisable and
shall vest over such period of time, or upon such events, as determined by the
Committee (including based on achievement of performance goals or future service
requirements).

 

7.3     Exercise of Stock Appreciation Right. A Participant desiring to exercise
a Stock Appreciation Right shall give written or electronic notice, on a form
provided by the Company, of such exercise to the Company with the information
the Company deems reasonably necessary to exercise the Stock Appreciation Right.
If a Stock Appreciation Right is issued in tandem with an Option, except as may
otherwise be provided by the Committee, the Stock Appreciation Right shall be
exercisable during the period that its related Option is exercisable. Upon the
exercise of a Stock Appreciation Right, a Participant shall be entitled to
receive payment from the Company in an amount determined by multiplying:

 

(a)     The excess of the Fair Market Value of a share of Stock on the date of
exercise over the Grant Price; by

 

(b)     The number of shares of Stock with respect to which the Stock
Appreciation Right is exercised.

 

At the discretion of the Committee, the payment upon exercise may be in cash,
shares of Stock or any combination thereof, or in any other manner approved by
the Committee in its sole discretion. The Committee’s determination as to the
form of settlement shall be set forth in the Award Agreement.

 

7.4     Effect of Exercise. If a Stock Appreciation Right is issued in tandem
with an Option, the exercise of the Stock Appreciation Right or the related
Option will result in an equal reduction in the number of corresponding shares
of Stock subject to the Option or Stock Appreciation Right that were granted in
tandem with such Stock Appreciation Right and Option.

 

7.5     Termination of Service. Each Award Agreement shall set forth the extent
to which the Participant shall have the right to exercise the Stock Appreciation
Right following termination of the Participant’s Service. Such provisions shall
be determined in the sole discretion of the Committee, need not be uniform among
all Stock Appreciation Rights issued pursuant to the Plan, and may reflect
distinctions based on the reasons for termination of Service. Any Stock
Appreciation Right issued in tandem with an Option shall be exercisable
following termination of the Participant’s Service to the same extent that its
related Option is exercisable following the Participant’s termination of
Service.

 

7.6     Transferability. A Stock Appreciation Right shall only be transferable
upon the same terms and conditions with respect to transferability as are
specified in Sections 6.6 and 6.7 with respect to Options.

 

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8

RESTRICTED STOCK AND RESTRICTED STOCK UNITS

 

8.1     Grant of Restricted Stock or Restricted Stock Units. Subject to the
provisions of this Plan, the Committee at any time and from time to time, may
grant shares of Restricted Stock or Restricted Stock Units to Participants in
such amounts as the Committee shall determine.

 

8.2     Award Agreement. Each grant of Restricted Stock or Restricted Stock
Units shall be evidenced by an Award Agreement that shall specify the
Restriction Period, the number of shares of Restricted Stock or the number of
Restricted Stock Units granted and such other provisions as the Committee shall
determine.

 

8.3     Restrictions on Transfer. Except as provided in this Plan or an Award
Agreement, the shares of Restricted Stock and Restricted Stock Units may not be
sold, transferred, pledged, assigned or otherwise alienated or hypothecated
until the end of the Restriction Period established by the Committee and
specified in the Award Agreement (and in the case of Restricted Stock Units
until the date of delivery or other payment), or upon earlier satisfaction or
any other conditions, as specified by the Committee, in its sole discretion. All
rights with respect to the Restricted Stock or Restricted Stock Units granted to
a Participant shall be available during his or her lifetime only to such
Participant, except as otherwise provided in an Award Agreement or at any time
by the Committee.

 

8.4     Forfeiture; Other Restrictions. The Committee shall impose such other
conditions and restrictions on any shares of Restricted Stock or Restricted
Stock Units as it may deem advisable including a requirement that the
Participant pay a specified amount to purchase each share of Restricted Stock,
restrictions based upon the achievement of specific performance goals,
time-based restrictions on vesting following the attainment of the performance
goals, time-based restrictions or restrictions under applicable laws or under
the requirements of any stock exchange or market upon which shares of Stock are
then listed or traded, or holding requirements or sale restrictions placed on
the shares of Stock by the Company upon vesting of such Restricted Stock or
Restricted Stock Units.

 

8.5     Restricted Stock Units. A holder of Restricted Stock Units shall have no
rights other than those of a general creditor of the Company. Restricted Stock
Units represent an unfunded and unsecured obligation of the Company, subject to
the terms and conditions of the applicable Award Agreement. Restricted Stock
Units may be settled in cash or Stock, as determined by the Committee and set
forth in the Award Agreement.

 

8.6     Termination of Service. Unless otherwise provided by the Committee in
the applicable Award Agreement, upon the termination of a Participant’s Service
with the Company or an Affiliate, any shares of Restricted Stock or Restricted
Stock Units held by such Participant that have not vested, or with respect to
which all applicable restrictions and conditions have not lapsed, shall
immediately be deemed forfeited, and the Participant shall have no further
rights with respect to such Awards, including but not limited to any right to
vote Restricted Stock or any right to receive dividends or Dividend Equivalents
with respect to Restricted Stock or Restricted Stock Units.

 

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8.7     Stockholder Privileges. Unless otherwise determined by the Committee and
set forth in the Award Agreement:

 

(a)     A Participant holding shares of Restricted Stock shall generally have
the rights of stockholder to vote the shares or Restricted Stock during the
Restriction Period. The Committee may provide in an Award Agreement that the
holder of such Restricted Stock shall be entitled to receive ordinary cash
dividends actually paid with respect to the Restricted Stock in accordance with
Section 11.

 

(b)     A Participant holding Restricted Stock Units shall have no rights of a
stockholder of the Company with respect to the Restricted Stock Units. The
Committee may provide in an Award Agreement that the holder of such Restricted
Stock Units shall be entitled to receive Dividend Equivalents in accordance with
Section 11.

 

9

QUALIFIED PERFORMANCE BASED COMPENSATION

 

9.1     Grant or Vesting of Award Subject to Objective Performance Goals. The
Committee may, in its discretion, condition the grant, vesting, or payment of an
Award on the attainment of one or more pre-established objective performance
goals, in accordance with the “qualified performance based compensation”
exception to Code Section 162(m) and the requirements of Sections 9.2, 9.3 and
9.4 of this Plan. For the avoidance of doubt, the Committee may also, in its
discretion, condition the grant, vesting, or payment of an Award on the
attainment of one or more pre-established objective performance goals which are
not intended to qualify for the “qualified performance based compensation”
exception to Code Section 162(m) and which are not required to comply with the
requirements of Sections 9.2, 9.3 and 9.4 of this Plan.

 

9.2     Establishment of Performance Goals. All performance goals established
pursuant to this Article 9 shall be objective and shall be established by the
Committee within 90 days after the beginning of the period of service to which
the performance goal relates (and in no event after passage of more than 25% of
the period to which the performance goal relates). Performance goals may include
alternate and multiple goals and shall be based on one or more of the following
criteria: (a) total shareholder return; (b) return on assets, return on equity,
or return on capital employed; (c) measures of profitability such as earnings
per share, corporate or business-unit net income, net income before
extraordinary or one-time items, earnings before interest and taxes, or earnings
before interest, taxes, depreciation and amortization; (d) cash flow from
operations; (e) gross or net revenues or gross or net margins; (f) levels of
operating expense or other expense items reported on the income statement; (g)
measures of customer satisfaction and customer service; (h) safety; (i) annual
or multi-year average production growth; (j) efficiency or productivity measures
such as annual or multi-year absolute or per-unit operating and maintenance
costs; (k) satisfactory completion of a major project or organizational
initiative with specific criteria set in advance by the Committee; (l) debt
ratios or other measures of credit quality or liquidity; (m) strategic asset
sales or acquisitions in compliance with specific criteria set in advance by the
Committee; (n) sales and marketing measures, such as annual or multi-year
“net-back” sales or the introduction of new products in accordance with specific
goals set in advance by the Committee; (o) staffing and retention and (p) any
criteria stated in the stockholder approved 2013 Executive Officer
Performance–Based Compensation Plan (as amended). The performance goals
applicable to a particular Award shall be set forth by the Committee in the
Award Agreement for such Award.

 

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9.3     Achievement of Performance Goals. The Committee shall certify in writing
prior to the grant, vesting, or payment of any Award that the applicable
performance goals have been satisfied. Except as may otherwise be provided
herein or as may otherwise be contained in the Award Agreement (which provisions
shall comply with Section 162(m)), in the event that the performance goals are
not satisfied, the Award shall not be granted or become vested or payable, as
applicable.

 

9.4     Committee to Comply with Section 162(m). Notwithstanding anything to the
contrary herein, the “Committee,” for purposes of this Section 9, shall consist
solely of two or more persons who qualify as “outside directors” within the
meaning of Section 162(m) of the Code.

 

10

OTHER STOCK-BASED AWARDS

 

From time to time during the duration of this Plan, the Committee may, in its
sole discretion, adopt one or more incentive compensation arrangements for
Participants pursuant to which the Participants may (i) acquire shares of Stock
under the Plan, whether by purchase, outright grant, or otherwise, or (ii)
receive an Award, whether payable in cash or in Stock, the value of which is
determined, in whole or in part, based on the value of Common Stock. Any such
arrangements shall be subject to the general provisions of this Plan and all
cash payments or shares of Stock issued pursuant to such arrangements shall be
made under this Plan.

 

11

DIVIDENDS AND DIVIDEND EQUIVALENTS

 

Subject to the terms of the Plan and any applicable Award Agreement, a
Participant shall, if so determined by the Committee, be entitled to receive,
currently, or on a deferred basis, dividends or Dividend Equivalents, with
respect to the shares of Stock covered by the Award. The Committee may provide
that any dividends paid on shares of Stock subject to an Award must be
reinvested in additional shares of Stock, which may or may not be subject to the
same vesting conditions and restrictions applicable to the Award.
Notwithstanding the award of Dividend Equivalents or dividends, a Participant
shall not be entitled to receive a special or extraordinary dividend or
distribution unless the Committee shall have expressly authorized such receipt.
All distributions, if any, received by a Participant with respect to an Award as
a result of any split, Stock dividend, combination of shares of Stock, or other
similar transaction shall be subject to the restrictions applicable to the
original Award.

 

12

TAX WITHHOLDING

 

The Company or any Affiliate, as the case may be, shall have the right to deduct
from payments of any kind otherwise due to a Participant any federal, state, or
local taxes, domestic or foreign, of any kind required by law with respect to
the vesting of or other lapse of restrictions applicable to Awards or upon the
issuance of any shares of Stock or payment of any kind upon the exercise of any
Options or Stock Appreciation Rights. At the time of such vesting, lapse,
payment, or exercise, the Participant shall pay to the Company or Affiliate, as
the case may be, any amount that the Company or Affiliate may reasonably
determine to be necessary to satisfy such withholding obligation.

 

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Subject to the prior approval of the Company or the Affiliate, which may be
withheld by the Company or the Affiliate, as the case may be, in its sole
discretion, the Participant may elect to have shares of Stock withheld or to
deliver shares to satisfy the minimum statutory withholding rates for federal,
state and local income taxes and employment taxes that are applicable to
supplemental taxable income (“Minimum Statutory Withholding”) obligations. The
Participant may elect to satisfy Minimum Statutory Withholding obligations, in
whole or in part, (i) by causing the Company or the Affiliate to withhold shares
of Stock otherwise issuable to the Participant or (ii) by delivering to the
Company or the Affiliate shares of Stock already owned by the Participant (for
at least six (6) months or such other period as may be required by the Committee
in order to comply with applicable law and to avoid adverse accounting
consequences). The shares of Stock so delivered or withheld shall have an
aggregate Fair Market Value not in excess of such withholding obligations. The
Fair Market Value of the shares of Stock used to satisfy such withholding
obligation shall be determined by the Committee as of the date that the amount
of tax to be withheld is to be determined. A Participant who has made an
election pursuant to this Section 12 may satisfy his or her withholding
obligation only with shares of Stock that are not subject to any repurchase,
forfeiture, unfulfilled vesting, or other similar requirements.

 

13

PARACHUTE LIMITATIONS

 

Notwithstanding any other provision of this Plan or of any other agreement,
contract, or understanding heretofore or hereafter entered into by a Participant
with the Company or any Affiliate, except an agreement, contract, or
understanding that expressly or impliedly modifies or excludes application of
this Section 13 (an “Other Agreement”), and notwithstanding any formal or
informal plan or other arrangement for the direct or indirect provision of
compensation to the Participant (including groups or classes of participants or
beneficiaries of which the Participant is a member), whether or not such
compensation is deferred, is in cash, or is in the form of a benefit to or for
the Participant (a “Benefit Arrangement”), if the Participant is a “disqualified
individual,” as defined in Section 280G(c) of the Code, any Awards held by that
Participant and any right to receive any payment or other benefit under this
Plan shall not become exercisable or vested (i) to the extent that such right to
exercise, vesting, payment, or benefit, taking into account all other rights,
payments, or benefits to or for the Participant under this Plan, all Other
Agreements, and all Benefit Arrangements, would cause any payment or benefit to
the Participant under this Plan to be considered a “parachute payment” within
the meaning of Section 280G(b)(2) of the Code as then in effect (a “Parachute
Payment”) and (ii) if, as a result of receiving a Parachute Payment, the
aggregate after-tax amounts received by the Participant from the Company under
this Plan, all Other Agreements, and all Benefit Arrangements would be less than
the maximum after-tax amount that could be received by the Participant without
causing any such payment or benefit to be considered a Parachute Payment. In the
event that the receipt of any such right to exercise, vesting, payment, or
benefit under this Plan, in conjunction with all other rights, payments, or
benefits to or for the Participant under any Other Agreement or any Benefit
Arrangement would cause the Participant to be considered to have received a
Parachute Payment under this Plan that would have the effect of decreasing the
after-tax amount received by the Participant as described in clause (ii) of the
preceding sentence, then the Committee shall have the right, in its sole
discretion, to designate those rights, payments, or benefits under this Plan,
any Other Agreements, and any Benefit Arrangements to be reduced or eliminated
so as to avoid having the payment or benefit to the Participant under this Plan
be deemed to be a Parachute Payment.

 

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14

EFFECT OF CHANGES IN CAPITALIZATION

 

14.1     Changes in Stock. The maximum number of shares of Stock for which
Awards may be made under the Plan as set forth in Section 4.1 shall be
proportionately increased or decreased for any increase or decrease in the
number of shares of Stock on account of any recapitalization, reclassification,
split, reverse split, combination, exchange, dividend or other distribution
payable in shares of Stock, or for any other increase or decrease in such shares
of Stock effected without receipt of consideration by the Company occurring
after the Effective Date (any such event hereafter referred to as a “Corporate
Event”). In addition, subject to the exception set forth in the second sentence
of Section 14.4, the number and kind of shares for which Awards are outstanding
shall be proportionately increased or decreased for any increase or decrease in
the number of shares of Stock on account of any Corporate Event. Any such
adjustment in outstanding Options or Stock Appreciation Rights shall not
increase the aggregate Exercise Price or Grant Price payable with respect to
shares that are subject to the unexercised portion of an outstanding Option or
Stock Appreciation Right, as applicable, and the adjustment shall comply with
the requirements under Section 409A of the Code. The conversion of any
convertible securities of the Company shall not be treated as an increase in
shares effected without receipt of consideration. Notwithstanding the foregoing,
in the event of any distribution to the Company’s stockholders of securities of
any other entity or other assets (including an extraordinary cash dividend but
excluding a non-extraordinary dividend payable in cash or in stock of the
Company) without receipt of consideration by the Company, the Company shall
proportionately adjust (i) the number and kind of shares subject to outstanding
Awards and/or (ii) the Exercise Price per share of outstanding Options and the
Grant Price of outstanding Stock Appreciation Rights to reflect such
distribution. Notwithstanding the foregoing, upon the occurrence of any event or
transaction contemplated in this Section 14.1, any changes contemplated herein
shall be modified to the minimum extent necessary, in the sole discretion of the
Committee, to avoid any tax that may otherwise become due under Section 409A of
the Code.

 

14.2     Change of Control. Subject to the exception set forth in the second
sentence of Section 14.4, and except as otherwise provided in any other
agreement, contract, or understanding heretofore or hereafter entered into by a
Participant with the Company or any Affiliate, upon a Change of Control, the
Committee in its discretion may take any of the following actions with respect
to non-vested Awards as of the date of the Change of Control: (i) provide that
any or all such outstanding Awards shall be fully vested, exercisable, and/or
payable regardless of whether all vesting conditions relating to length of
service, attainment of performance goals, or otherwise have been satisfied; (ii)
provide that any or all such outstanding Awards shall become fully vested,
exercisable, and/or payable if, within a reasonable period of time not to exceed
18 months after the consummation of a Change of Control, a Participant’s Service
is terminated by either the Company, an Affiliate or a successor in interest to
the Company or an Affiliate without Cause or by the Participant for Good Reason;
or (iii) take such further actions, if any, as it deems necessary or desirable
with respect to any Awards, including, without limitation, providing that such
Awards are fully vested, exercisable and/or payable. The Committee need not take
the same action with respect to all outstanding Awards or to all outstanding
Awards of the same type.

 

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14.3     Reorganization in Which the Company Is the Surviving Entity and in
Which No Change of Control Occurs. Subject to the exception set forth in the
second sentence of Section 14.4, if the Company shall be the surviving entity in
any reorganization, merger, or consolidation of the Company with one or more
other entities and in which no Change of Control occurs, any Award theretofore
made pursuant to the Plan shall pertain to and apply solely to the securities to
which a holder of the number of securities subject to such Award would have been
entitled immediately following such reorganization, merger, or consolidation,
and, in the case of Options and Stock Appreciation Rights, with a corresponding
proportionate adjustment of the Exercise Price or Grant Price per share so that
the aggregate Exercise Price or Grant Price thereafter shall be the same as the
aggregate Exercise Price or Grant Price of the shares of Stock remaining subject
to the Option or Stock Appreciation Right immediately prior to such
reorganization, merger, or consolidation. Subject to any contrary language in an
Award Agreement evidencing any other Award, any restrictions applicable to such
Award shall apply as well to any replacement shares of Stock received by the
Participant as a result of the reorganization, merger or consolidation.
Notwithstanding the foregoing, upon the occurrence of any event or transaction
contemplated in this Section 14.3, any changes contemplated herein shall be
modified to the minimum extent necessary, in the sole discretion of the
Committee, to avoid any tax that may otherwise become due under Section 409A of
the Code.

 

14.4     Adjustment. Adjustments under Section 14 related to shares of Stock or
securities of the Company shall be made by the Committee, whose determination in
that respect shall be final, binding and conclusive. The Committee may provide
in the Award Agreements at the time of Award, or any time thereafter with the
consent of the Participant, for different provisions to apply to an Award in
place of those described in Sections 14.1, 14.2 and 14.3. Notwithstanding the
foregoing, any different provisions or changes to provisions contemplated herein
shall be modified to the minimum extent necessary, in the sole discretion of the
Committee, to avoid any tax that may otherwise become due under Section 409A of
the Code.

 

14.5     No Limitations on the Company. The making of Awards pursuant to the
Plan shall not affect or limit in any way the right or power of the Company to
make adjustments, reclassifications, reorganizations, or changes of its capital
or business structure or to merge, consolidate, dissolve, or liquidate, or to
sell or transfer all or any part of its business or assets.

 

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15

REQUIREMENTS OF LAW

 

15.1     General. The Company shall not be required to issue or sell any shares
of Stock under any Award if the issuance or sale of such shares would constitute
a violation by the Participant, any other individual exercising an Option or
Stock Appreciation Right, or the Company of any provisions of any law or
regulation of any governmental authority, including without limitation any
federal or state securities laws or regulations. If at any time the Company
shall determine, in its discretion, that the listing, registration or
qualification of any shares subject to an Award upon any securities exchange or
under any governmental regulatory body is necessary or desirable as a condition
of, or in connection with, the issuance or purchase of shares of Stock
hereunder, no shares of Stock may be issued or sold to the Participant or any
other individual exercising an Option or Stock Appreciation Right pursuant to
such Award unless such listing, registration, qualification, consent or approval
shall have been effected or obtained free of any conditions not acceptable to
the Company, and any delay caused thereby shall in no way affect the date of
termination of the Award. Specifically, in connection with the Securities Act,
upon the exercise of any Option or the delivery of any shares of Stock
underlying an Award, unless a registration statement under the Securities Act is
in effect with respect to the shares of Stock covered by such Award, the Company
shall not be required to issue or sell such shares of Stock unless the Committee
has received evidence satisfactory to it that the Participant or any other
individual exercising an Option may acquire such shares of Stock pursuant to an
exemption from registration under the Securities Act. Any determination in this
connection by the Committee shall be final, binding, and conclusive. The Company
may, but shall in no event be obligated to, register any securities covered
hereby pursuant to the Securities Act. The Company shall not be obligated to
take any affirmative action in order to cause the exercise of an Option or the
issuance or sale of shares of Stock pursuant to the Plan to comply with any law
or regulation of any governmental authority. As to any jurisdiction that
expressly imposes the requirement that an Option shall not be exercisable until
the shares of Stock covered by such Option are registered or are exempt from
registration, the exercise of such Option (under circumstances in which the laws
of such jurisdiction apply) shall be deemed conditioned upon the effectiveness
of such registration or the availability of such an exemption.

 

15.2     Rule 16b-3. During any time when the Company has a class of equity
security registered under Section 12 of the Exchange Act, it is the intent of
the Company that Awards pursuant to the Plan and the exercise of Options granted
hereunder will qualify for the exemption provided by Rule 16b-3 under the
Exchange Act. To the extent that any provision of the Plan or action by the
Committee does not comply with the requirements of Rule 16b-3, it shall be
deemed inoperative to the extent permitted by law and deemed advisable by the
Committee, and shall not affect the validity of the Plan. In the event that Rule
16b-3 is revised or replaced, the Committee may exercise its discretion to
modify this Plan in any respect necessary to satisfy the requirements of, or to
take advantage of any features of, the revised exemption or its replacement.   

 

16

GENERAL PROVISIONS

 

16.1     Disclaimer of Rights. No provision in the Plan, in any Award or in any
Award Agreement shall be construed to confer upon any individual the right to
remain in the employ or service of the Company or any Affiliate, or to interfere
in any way with any contractual or other right or authority of the Company
either to increase or decrease the compensation or other payments to any
individual at any time, or to terminate any employment or other relationship
between any individual and the Company or any Affiliate. The obligation of the
Company to pay any benefits pursuant to this Plan shall be interpreted as a
contractual obligation to pay only those amounts described herein, in the manner
and under the conditions prescribed herein. The Plan shall in no way be
interpreted to require the Company to transfer any amounts to a third party
trustee or otherwise hold any amounts in trust or escrow for payment to any
participant or beneficiary under the terms of the Plan.

 

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16.2     Nontransferability of Awards. Except as provided in Sections 6.6, 6.7,
and 7.6 or otherwise at the time of grant or thereafter, no right or interest of
any Participant in an Award granted pursuant to the Plan shall be assignable or
transferable during the lifetime of the Participant, either voluntarily or
involuntarily, or subjected to any lien, directly or indirectly, by operation of
law, or otherwise, including execution, levy, garnishment, attachment, pledge or
bankruptcy, except pursuant to a domestic relations order in settlement of
marital property rights. In the event of a Participant’s death, a Participant’s
rights and interests in Awards shall only be transferable by will or the laws of
descent and distribution to the extent provided under this Plan, and payment of
any amounts due thereunder shall be made to, and exercise of any Option or Stock
Appreciation Right may be made by, the Participant’s legal representatives,
heirs or legatees. If in the opinion of the Committee a person entitled to
payments or to exercise rights with respect to the Plan is unable to care for
his or her affairs because of mental condition, physical condition or age,
payment due such person may be made to, and such rights shall be exercised by,
such person’s guardian, conservator or other legal personal representative upon
furnishing the Committee with evidence satisfactory to the Committee of such
status.

 

16.3     Changes in Accounting or Tax Rules. Except as provided otherwise at the
time an Award is granted, notwithstanding any other provision of the Plan to the
contrary, if, during the term of the Plan, any changes in the financial or tax
accounting rules applicable to any Award shall occur which, in the sole judgment
of the Committee, may have a material adverse effect on the reported earnings,
assets or liabilities of the Company, the Committee shall have the right and
power to modify as necessary, any then outstanding and unexercised Options,
Stock Appreciation Rights and other outstanding Awards as to which the
applicable rules or other restrictions have not been satisfied.

 

16.4     Nonexclusivity of the Plan. The adoption of the Plan shall not be
construed as creating any limitations upon the right and authority of the
Committee to adopt such other incentive compensation arrangements (which
arrangements may be applicable either generally to a class or classes of
individuals or specifically to a particular individual or particular
individuals) as the Committee in its discretion determines desirable.

 

16.5     Captions. The use of captions in this Plan or any Award Agreement is
for the convenience of reference only and shall not affect the meaning of any
provision of the Plan or such Award Agreement.

 

16.6     Other Award Agreement Provisions. Each Award Agreement may contain such
other terms and conditions not inconsistent with the Plan as may be determined
by the Committee, in its sole discretion.

 

16.7     Other Employee Benefits. The amount of any compensation deemed to be
received by a Participant as a result of the exercise of an Option or Stock
Appreciation Right, the sale of Shares received upon such exercise, the vesting
of any Restricted Stock, distributions with respect to Restricted Stock Units,
or Other Stock-Based Awards shall not constitute “earnings” or “compensation”
with respect to which any other employee benefits of such employee are
determined, including without limitation, benefits under any pension, profit
sharing, 401(k), life insurance or salary continuation plan, except as may be
specifically be provided otherwise under the terms of such other employee
benefit plan or program.

 

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16.8     Severability. If any provision of the Plan or any Award Agreement shall
be determined to be illegal or unenforceable by any court of law in any
jurisdiction, the remaining provisions hereof and thereof shall be severable and
enforceable in accordance with their terms, and all provisions shall remain
enforceable in any other jurisdiction.

 

16.9     Governing Law. The validity and construction of this Plan and the Award
Agreements shall be construed in accordance with and governed by the laws of the
State of Delaware other than any conflicts or choice of law rule or principle
that might otherwise refer construction or interpretation of this Plan and the
Award Agreements to the substantive laws of any other jurisdiction.

 

16.10     Section 409A. Notwithstanding anything in this Plan to the contrary,
the Plan and Awards made under the Plan are intended to comply with the
requirements imposed by Section 409A of the Code. If any Plan provision or Award
under the Plan would result in the imposition of an additional tax under Section
409A of the Code, the Company and the Participant intend that the Plan provision
or Award will be reformed to avoid imposition, to the extent possible, of the
applicable tax and no action taken to comply with Section 409A of the Code shall
be deemed to adversely affect the Participant’s rights to an Award. The
Participant further agrees that the Committee, in the exercise of its sole
discretion and without the consent of the Participant, may amend or modify an
Award in any manner and delay the payment of any amounts payable pursuant to an
Award to the minimum extent necessary to meet the requirements of Section 409A
of the Code as the Committee deems appropriate or desirable. Subject to any
other restrictions or limitations contained herein, in the event that a
“specified employee” (as defined under Section 409A of the Code) becomes
entitled to a payment under the Plan that is subject to Section 409A of the Code
on account of a “separation of service” (as defined under Section 409A oft the
Code), such payment shall not occur until the date that is six months plus one
day from the date of such “separation from service.” Any amount that is
otherwise payable within the six (6) month period described herein will be
aggregated and paid in a lump sum amount without interest.

 

17

AMENDMENT, MODIFICATION AND TERMINATION

 

17.1     Amendment, Modification, and Termination. Subject to Sections 3.2,
16.10 and 17.2, the Board may at any time terminate, and from time to time may
amend or modify the Plan provided, however, that no amendment or modification
may become effective without approval of the stockholders of the Company if
stockholder approval is required to enable the Plan to satisfy any applicable
statutory or regulatory requirements, or if the Company, on the advice of
counsel, determines that stockholder approval is otherwise necessary or
desirable.

 

17.2     Awards Previously Granted. Except as otherwise may be required under
Section 16.10, notwithstanding Section 17.1 to the contrary, no amendment,
modification or termination of the Plan or Award Agreement shall adversely
affect in any material way any previously granted Award, without the written
consent of the Participant holding such Award.

 

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18

STOCKHOLDER APPROVAL; EFFECTIVE DATE OF PLAN

 

The Plan shall be effective as of the Effective Date, which is the date the Plan
was approved by the stockholders of the Company.

 

19

DURATION

 

Unless sooner terminated by the Board, this Plan shall terminate automatically
10 years from the Effective Date. After the Plan is terminated, no Awards may be
granted. Awards outstanding at the time the Plan is terminated shall remain
outstanding in accordance with the terms and conditions of the Plan and the
Award Agreement.

 

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20

EXECUTION

 

To record adoption of the Plan by the Board as of January 24, 2011, the Company
has caused its authorized officer to execute the Plan.

 

 

  M.D.C. HOLDINGS, INC.                       By:   /s/ Michael Touff          
              Date: March 1, 2011  

 

 

M.D.C. Holdings, Inc. 2011 Equity Incentive Plan 24