exv10w1






Exhibit 10.1




THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT

AGREEMENT




          This THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT (“Amendment”), dated as
of December 22, 2008, among M.D.C. HOLDINGS, INC., a Delaware corporation (the “Borrower”), the
Lenders that are identified on the signature pages hereto and JPMORGAN CHASE BANK, N.A., as
Administrative Agent (the “Administrative Agent”).



RECITALS




          WHEREAS, the Borrower, the Lenders identified on the signature pages hereto, certain other
Lenders and Administrative Agent are parties to that certain Second Amended and Restated Credit
Agreement dated as of March 22, 2006 (as amended by the First Amendment to Second Amended and
Restated Credit Agreement dated October 24, 2007 and Second Amendment to Second Amended and
Restated Credit Agreement dated January 24, 2008 and as it may be amended, renewed and restated
from time to time, the “Credit Agreement”) (all capitalized terms not defined herein shall have the
meanings given such terms in the Credit Agreement);



          WHEREAS, the Borrower and the Lenders desire to amend the Credit Agreement for the purposes
hereinafter set forth;



          NOW, THEREFORE, for good and valuable consideration, the parties hereto hereby agree as
follows:



     1. Aggregate Commitment. Effective as of the Amendment Effective Date (as hereinafter
defined), the Aggregate Commitment is hereby reduced, on a pro rata basis among the Lenders, to
$800,000,000 and Schedule 2 of the Credit Agreement is amended and restated in its entirety and
replaced by Schedule 2 attached hereto.



     2. Definitions.



     (a) Effective as of the Amendment Effective Date (defined below), the following definitions
are added to Article I of the Credit Agreement:




     “Adjusted Cash Flow from Operations” means, for any period of four consecutive fiscal
quarters of the Borrower ending on any date of determination, without duplication, the sum
of (a) the cash generated by (or used in) operating activities, as calculated on the
quarterly financial statements for the Borrower and the Guarantors (specifically excluding
the Non-Guarantor Subsidiaries), on a consolidated basis for such period, as determined in
accordance with Agreement Accounting Principles, such amount being reflected in the line
item designated “Net cash (used in) provided by operating activities” on the Borrower’s
quarterly financial statements, plus (b) Consolidated Interest Incurred.




     “Applicable ABR Margin” means, at any date of determination, the margin indicated in
Section 2.11 as the “Applicable ABR Margin.”



 









 






     “Borrowing Base Availability” means, at any time, the amount (if any) by which the
Borrowing Base exceeds Consolidated Senior Debt Borrowings.




     “Cash Flow/Liquidity Test” is defined in Section 9.6.




     “Defaulting Lender” means any Lender, as determined by the Administrative Agent, that
has (a) failed to fund any portion of its Loans or participations in Facility Letters of
Credit or Swing Line Loans within three (3) Business Days of the date required to be funded
by it hereunder, (b) notified the Borrower, the Administrative Agent, an Issuing Bank, the
Swing Line Lender or any Lender in writing that it does not intend to comply with any of its
funding obligations under this Agreement or has made a public statement to the effect that
it does not intend to comply with its funding obligations under this Agreement, (c) failed,
within three (3) Business Days after request by the Administrative Agent, to confirm that it
will comply with the terms of this Agreement relating to its obligations to fund prospective
Loans and participations in then outstanding Facility Letters of Credit and Swing Line
Loans, (d) otherwise failed to pay over to the Administrative Agent or any other Lender any
other amount required to be paid by it hereunder within three Business Days of the date when
due, unless the subject of a good faith dispute, or (e) (i) become or is insolvent or has a
parent company that has become or is insolvent or (ii) become the subject of a bankruptcy or
insolvency proceeding, or has had a receiver, conservator, trustee or custodian appointed
for it, or has taken any action in furtherance of, or indicating its consent to, approval of
or acquiescence in any such proceeding or appointment or has a parent company that has
become the subject of a bankruptcy or insolvency proceeding, or has had a receiver,
conservator, trustee or custodian appointed for it, or has taken any action in furtherance
of, or indicating its consent to, approval of or acquiescence in any such proceeding or
appointment.




     “Interest Coverage Ratio” is defined in Section 9.2(b).



     (b) Effective as of the Amendment Effective Date, the following definitions in Article I of
the Credit Agreement are hereby amended and restated in their entirety as follows:




     “ABR Advance” means an Advance which bears interest at the Alternate Base Rate plus the
Applicable ABR Margin.




     “ABR Loan” means a Loan which bears interest at the Alternate Base Rate plus the
Applicable ABR Margin.




     “Aggregate Commitment” means the aggregate of the Commitments of all Lenders, as
increased or reduced from time to time pursuant to the terms hereof. As of December 22,
2008, the Aggregate Commitment is $800,000,000.




     “Alternate Base Rate” means, for any day, a rate per annum equal to the greatest of (a)
the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such
day plus 1/2 of 1% and (c) the Adjusted LIBO Rate for a one month Interest Period on such day
(or if such day is not a Business Day, the immediately preceding Business Day) plus 1%,
provided that, for the avoidance of doubt, the Adjusted LIBO Rate for any day shall be based
on the rate appearing on the Reuters BBA Libor Rates



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Page 3750 (or on any successor or substitute page of such page) at approximately 11:00
a.m. London time on such day. Any change in the Alternate Base Rate due to a change in the
Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBO Rate shall be effective
from and including the effective date of such change in the Prime Rate, the Federal Funds
Effective Rate or the Adjusted LIBO Rate, respectively.




     “Base LIBO Rate” means, with respect to any LIBOR Advance for any Interest Period, the
rate appearing on Reuters BBA Libor Rates Page 3750 (or on any successor or substitute page
of such page) providing rate quotations comparable to those currently provided on such page
of such page, as determined by Administrative Agent from time to time for purposes of
providing quotations of interest rates applicable to dollar deposits in the London interbank
market, at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a maturity
comparable to such Interest Period. In the event that such rate is not available at such
time for any reason, then the “Base LIBO Rate” with respect to such LIBOR Advance
for such Interest Period shall be the rate at which dollar deposits of $5,000,000 and for a
maturity comparable to such Interest Period are offered by the principal London office of
Administrative Agent in immediately available funds in the London interbank market at
approximately 11:00 a.m., London time, two Business Days prior to the commencement of such
Interest Period.




     “Borrowing Base” means, with respect to an Inventory Valuation Date for which it is to
be determined, an amount equal to the sum (without duplication) of the following assets of
Borrower and each Guarantor (but only to the extent that such assets are not subject to any
Liens other than Permitted Liens):




(i) Unrestricted Cash in excess of $50,000,000, minus the amount by which (a) the
sum of (1) the outstanding balance of all Loans and (2) the aggregate amounts paid
by Issuing Banks on any Facility Letters of Credit that have not been reimbursed by
or on behalf of Borrower exceeds (b) the amount of cash collateral deposited by
Borrower pursuant to Section 2.24 then held by Administrative Agent, provided,
however, that the amount determined under this clause (i) shall not be less than
zero (0);




(ii) the Receivables, multiplied by ninety percent (90%); plus




(iii) the book value of Presold Units, multiplied by ninety percent (90%);
plus




(iv) the book value of Spec Units (other than such Spec Units, if any, as are
excluded from the Borrowing Base pursuant to the provisions of Section 9.5),
multiplied by eighty percent (80%); plus




(v) the book value of Model Units, multiplied by eighty percent (80%); plus




(vi) the book value of Finished Lots (other than such Finished Lots, if any, as are
excluded from the Borrowing Base pursuant to the provisions of Section 9.4),
multiplied by seventy percent (70%); plus



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(vii) the book value of Land Under Development (other than such Land Under
Development, if any, as is excluded from the Borrowing Base pursuant to the
provisions of Section 9.4), multiplied by fifty percent (50%); plus




(viii) the book value of Entitled Land (other than such Entitled Land, if any, as is
excluded from the Borrowing Base pursuant to the provisions of Section 9.4),
multiplied by thirty percent (30%);




provided, however, that the aggregate (without duplication) of the amounts
calculated pursuant to clauses (vi), (vii) and (viii) shall not exceed at any time forty
percent (40%) of the Borrowing Base.




“Cash Equivalents” means:




(a) U.S. Treasury bills and notes;




(b) GNMA securities;




(c) debt, securities and obligations either issued by or insured by agencies of the
United States of America;




(d) commercial paper rated either “A1” or better by S&P or “P1” by Moody’s;




(e) Dutch Auction Preferred Stocks (DAP) rated either “AA” or better by S&P or “Aa2”
or better by Moody’s;




(f) certificates of deposit and time deposits issued by (i) any Lender (other than a
Defaulting Lender) or affiliate thereof or (ii) commercial banks, savings banks or
savings and loan associations whose short-term debt is rated either “A1” or better
by S&P or “P1” or better by Moody’s, or if such an institution is a subsidiary whose
short-term debt is unrated, then its parent corporation must have such a rating;




(g) bankers acceptances issued by financial institutions that meet the requirements
for certificates of deposit or time deposits;




(h) deposits in institutions having the same qualifications required for investments
in certificates of deposit or time deposits;




(i) repurchase agreements collateralized by any of the items identified in clauses
(a) through (h) above; and




(j) money market accounts a majority of whose assets are composed of items described
by any of the foregoing clauses (a) through (i) through brokerage firms deemed
acceptable by Borrower’s management.




     “Financial Covenant Test” means each of the Consolidated Tangible Net Worth Test, the
Leverage Test and Cash Flow/Liquidity Test. Neither the covenant set forth in



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Section 9.3 nor the Land-Owned Test or Spec Unit Inventory Test shall constitute a
Financial Covenant Test.



     “Leverage Ratio” means at any date, the ratio (expressed as a percentage) of (i) (A)
Consolidated Indebtedness less (B) Unrestricted Cash of the Borrower and the Guarantors in
excess of $50,000,000 but not to exceed $500,000,000 to (ii) (A) the sum of Consolidated
Indebtedness and Adjusted Consolidated Tangible Net Worth less (B) Unrestricted Cash of the
Borrower and the Guarantors in excess of $50,000,000 but not to exceed $500,000,000. For
avoidance of doubt, the foregoing definition of “Leverage Ratio” applies wherever the term
is used in this Agreement, including without limitation Section 2.11 and Section 9.2.



     “Permitted Leverage Ratio” means either 55% or 50%, as determined from time to time as
provided in Section 9.2. The Permitted Leverage Ratio as of December 31, 2008 shall be 50%
and shall be subject to adjustment from time to time thereafter as provided in Section 9.2.



     “Statutory Reserve Rate” means a fraction (expressed as a decimal), the numerator of
which is the number one and the denominator of which is the number one minus the aggregate
of the maximum reserve percentages (including any marginal, special, emergency or
supplemental reserves) expressed as a decimal established by the Board to which the
Administrative Agent is subject for eurocurrency funding (currently referred to as
“Eurocurrency Liabilities” in Regulation D of the Board). Such reserve percentages shall
include those imposed pursuant to such Regulation D. LIBOR Advances shall be deemed to
constitute eurocurrency funding and to be subject to such reserve requirements without
benefit of or credit for proration, exemptions or offsets that may be available from time to
time to any Lender under such Regulation D or any comparable regulation. The Statutory
Reserve Rate shall be adjusted automatically on and as of the effective date of any change
in any reserve percentage.



     (c) Effective as of the Amendment Effective Date, the following defined terms are deleted from
Article I of the Credit Agreement: “Assessment Rate”; “Base CD Rate”; and “Three-Month Secondary CD
Rate.”



     3. Increases in Aggregate Commitment. Effective as of the Amendment Effective Date,
clause (C) of Section 2.5(d)(i) is amended and restated in its entirety as follows:



     (C) the Aggregate Commitment shall not exceed $1,300,000,000.



     4. Changes in Interest Rate. Effective as of the Amendment Effective Date, Section
2.10 of the Credit Agreement is hereby amended and restated in its entirety as follows:




     2.10 Changes in Interest Rate, etc. Each ABR Advance shall bear interest on
the outstanding principal amount thereof, for each day from and including the date such
Advance is made or is converted from a LIBOR Advance into an ABR Advance pursuant to Section
2.9 to but excluding the date it becomes due or is converted into a LIBOR Advance pursuant
to Section 2.9 hereof, at a rate per annum equal to the Alternate Base



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Rate for such day, plus the Applicable ABR Margin. Changes in the rate of interest on
any Advance maintained as an ABR Advance will take effect simultaneously with each change in
the Alternate Base Rate (and will also take effect upon any change in the Applicable ABR
Margin in accordance with Section 2.11). Each LIBOR Advance shall bear interest from and
including the first day of the Interest Period applicable thereto to (but not including) the
last day of such Interest Period at the interest rate determined as applicable to such LIBOR
Advance. No Interest Period may end after the Facility Termination Date.



     5. Pricing. Effective as of the Amendment Effective Date, Section 2.11 of the Credit
Agreement is hereby amended and restated in its entirety as follows:




     2.11 Determination of Applicable LIBOR Rate Margin, Applicable ABR Margin and
Applicable Unused Commitment Rate.




     (a) Pricing Grid. The Applicable LIBOR Rate Margin, the Applicable ABR Margin
and the Applicable Unused Commitment Rate shall be determined by reference to (i) the Rating
and (ii) the Leverage Ratio in accordance with the following table:



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	LEVEL I	 	 	LEVEL II	 	 	LEVEL III	 	 	LEVEL IV	 	 	LEVEL V	 
	 	Rating	 	 	BBB+/Baa1

or above	 	 	BBB/Baa2	 	 	BBB-/Baa3	 	 	BB+/Ba1	 	 	BB/Ba2 or
below 
or no rating	 
	 	Leverage Ratio	 	 	Less than or

equal to

30%	 	 	Greater than

30% and less

than or equal to

40%	 	 	Greater than

40% and less

than or equal to

50%	 	 	Greater than

50%	 	 	Greater than

50%	 
	 	Applicable 

LIBOR Rate 

Margin/Applicable 

Letter of Credit 

Rate

	 	 	 	1.25	%	 	 	 	1.50	%	 	 	 	1.75	%	 	 	 	2.00	%	 	 	 	2.25	%	 
	 	Applicable ABR 

Margin

	 	 	 	0.25	%	 	 	 	0.50	%	 	 	 	0.75	%	 	 	 	1.00	%	 	 	 	1.25	%	 
	 	Applicable 

Unused 

Commitment Rate

	 	 	 	0.225	%	 	 	 	0.25	%	 	 	 	0.275	%	 	 	 	0.35	%	 	 	 	0.40	%	 
	 







     In the event of a difference of one level between (x) the Leverage Ratio and (y) the
Rating, the lower pricing shall apply (for purposes of clarification, at any time that the
Rating is at Level V and the Leverage Ratio is greater than 50%, Level V pricing shall
apply); if the difference is more than one level, the level that is one level lower than the
higher pricing shall apply. Level II is the pricing level in effect as of December 22, 2008.




     (b) Adjustment. The Applicable Unused Commitment Rate and Applicable ABR
Margin shall be adjusted, as applicable from time to time, effective on (i) the first
Business Day after any change in the Rating or (ii) the fifth (5th) Business Day
following the delivery by Borrower, pursuant to Section 7.1(i) or (ii), of annual or
quarterly



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financial statements evidencing a change in the Leverage Ratio. The Applicable LIBOR
Rate Margin in respect of any LIBOR Advance shall be adjusted, as applicable from time to
time, effective on the first day of the Interest Period for any LIBOR Advance after (i) any
change in the Rating or (ii) the fifth (5th) Business Day following the delivery
by Borrower, pursuant to Section 7.1(i) or (ii), of annual or quarterly financial statements
evidencing a change in the Leverage Ratio. In the event that any such financial statement
is shown to be inaccurate (regardless of whether this Agreement is in effect or any Loans or
Commitments are outstanding when such inaccuracy is discovered), and such inaccuracy, if
corrected, would have led to the application of a higher Applicable LIBOR Rate Margin (and
Applicable Letter of Credit Rate), Applicable ABR Margin and Applicable Unused Commitment
Rate for any period (an “Applicable Period”) than the Applicable LIBOR Rate Margin (and
Applicable Letter of Credit Rate), Applicable ABR Margin and Applicable Unused Commitment
Rate actually applied for such Applicable Period, then (A) the Borrower shall immediately
deliver to the Administrative Agent a correct certificate and financial statements under
Section 7.1 for such Applicable Period, (B) the Applicable LIBOR Rate Margin (and Applicable
Letter of Credit Rate), Applicable ABR Margin and Applicable Unused Commitment Rate shall be
determined at such higher Applicable LIBOR Rate Margin (and Applicable Letter of Credit
Rate), Applicable ABR Margin and Applicable Unused Commitment Rate for such Applicable
Period, and (C) the Borrower shall immediately pay to the Administrative Agent (for the
ratable benefit of the Lenders) the accrued additional interest and additional fees owing as
a result of such higher Applicable LIBOR Rate Margin (and Applicable Letter of Credit Rate),
Applicable ABR Margin and Applicable Unused Commitment Rate.



     6. Interest Upon Event of Default. Effective as of the Amendment Effective Date, the
last sentence of Section 2.12 of the Credit Agreement is hereby amended and restated in its
entirety as follows:




During the continuance of an Event of Default, the Required Lenders may, at their option, by
notice to Borrower (which notice may be revoked at the option of the Required Lenders
notwithstanding any provision of Section 11.2 requiring unanimous consent of Lenders to
changes in interest rates), declare that (i) each LIBOR Advance shall bear interest for the
remainder of the applicable Interest Period at the rate otherwise applicable to such
Interest Period plus 2% per annum and (ii) each ABR Advance shall bear interest at a rate
per annum equal to the Alternate Base Rate plus the Applicable ABR Margin plus 2% per annum.



     7. Interest on Swing Line Loans. Effective as of the Amendment Effective Date,
Section 2.19(b) of the Credit Agreement is hereby amended and restated in its entirety as follows:




     (b) Interest. Swing Line Advances shall bear interest at the Alternate Base
Rate, plus the Applicable ABR Margin.



     8. Defaulting Lender. Effective as of the Amendment Effective Date, the following new
Section 2.24 is hereby added to the Credit Agreement:




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     Section 2.24 Defaulting Lender. Notwithstanding any provision of this
Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following
provisions shall apply for so long as such Lender is a Defaulting Lender:




     (a) if any Swing Line Loan is outstanding or Facility LC Obligations exist at the time
a Lender is a Defaulting Lender, the Borrower shall within one (1) Business Day following
notice by the Administrative Agent (i) prepay such Swing Line Loan or cash collateralize the
Defaulting Lender’s ratable share of such Swing Line Loan on terms satisfactory to the Swing
Line Lender and (ii) cash collateralize such Defaulting Lender’s ratable share of the
Facility LC Obligations in accordance with Section 4.10 for so long as any Facility LC
Obligations are outstanding; and




     (b) the Swing Line Lender shall not be required to fund any Swing Line Loan and no
Issuing Bank shall be required to issue, amend or increase any Facility LC unless cash
collateral has been provided by the Borrower in accordance with Section 2.24(a).



     9. Letters of Credit. (a) Effective as of the Amendment Effective Date, Section
4.2(ii) of the Credit Agreement is amended by deleting the reference to “$500,000,000” and
inserting in lieu thereof “$300,000,000.”




     (b) Effective as of the Amendment Effective Date, Section 4.10 of the Credit Agreement
is hereby amended and restated in its entirety as follows:




     4.10 Cash Collateralization. If any Event of Default shall occur and be
continuing, the Borrower shall deposit in an account with the Administrative Agent, in the
name of the Administrative Agent and for the ratable benefit of the Lenders (the “Facility
LC Collateral Account”), the Collateral Shortfall Amount from time to time required pursuant
to Section 11.1. Without limitation of the foregoing, if and when required pursuant to
Section 2.24, Borrower shall deposit in the Facility LC Collateral Account, the amount of
the Defaulting Lender’s ratable share of the Facility LC Obligations. Any deposit in the
Facility LC Collateral Account shall be held by the Administrative Agent as collateral for
the payment and performance of the obligations of the Borrower under this Agreement. The
Administrative Agent shall have exclusive dominion and control, including the exclusive
right of withdrawal, over the Facility LC Collateral Account. Borrower hereby pledges,
assigns and grants to Administrative Agent, on behalf of and for the ratable benefit of the
Lenders, a security interest in and to the Facility LC Collateral Account and all funds that
may from time to time be on deposit in the Facility LC Collateral Account to secure the
payment and performance of the obligations of the Borrower under this Agreement and the
other Loan Documents. Administrative Agent will invest any funds on deposit from time to
time in the Facility LC Collateral Account in certificates of deposit of the Lender acting
as Administrative Agent and having a maturity not exceeding 30 days. Interest on such
investment shall accumulate in such Facility LC Collateral Account. Moneys in such Facility
LC Collateral Account shall be applied by the Administrative Agent to reimburse the Issuing
Bank for any draws on Facility Letters of Credit for which it has not been reimbursed and,
to the extent not so applied, shall be held for the satisfaction of the reimbursement
obligations of the Borrower with respect to the Facility LC Obligations at such time or, if



8









 







the maturity of the Loans has been accelerated (but subject to the consent of Lenders
whose ratable share of Facility LC Obligations represents greater than 66-2/3% of the total
Facility LC Obligations), be applied to satisfy other obligations of the Borrower under this
Agreement. If the Borrower is required to provide an amount of cash collateral as a result
of the occurrence of an Event of Default, such amount (to the extent not applied as
aforesaid) shall be promptly returned to the Borrower upon written request after all Events
of Default have been cured or waived. If the Borrower is required to provide an amount of
cash collateral pursuant to Section 2.24, such amount (to the extent not applied as
aforesaid) shall, upon written request, be promptly returned to the Borrower from time to
time to the extent the amount deposited shall exceed the Defaulting Lender’s ratable share
of the Facility LC Obligations or if such Lender shall cease to be a Defaulting Lender.



     10. Financial Reporting. Effective as of the Amendment Effective Date, Section
7.1(viii) of the Credit Agreement is hereby amended and replaced in its entirety as follows:




     (viii) Within sixty (60) days after the end of each of the first three quarterly
periods, and within one hundred (100) days after the end, of each fiscal year, a certificate
of an Authorized Officer of Borrower as to Borrower’s compliance with the Financial Covenant
Tests and (without regard to whether compliance is required under Sections 9.4, 9.5 and 9.6)
the Land-Owned Test, the Spec Unit Inventory Test and Cash Flow/Liquidity Test in the form
of Exhibit F hereto.



     11. Consolidated Tangible Net Worth Test. Effective as of the Amendment Effective
Date, Section 9.1 of the Credit Agreement is hereby amended and restated in its entirety as
follows:




     9.1 Consolidated Tangible Net Worth Test. Consolidated Tangible Net Worth
shall not be less than (i) $850,000,000 plus (ii) fifty percent (50%) of
consolidated net income of Borrower and the Guarantors earned after September 30, 2008
(excluding any quarter in which there is a loss but applying consolidated net income of
Borrower and the Guarantors thereafter first to such loss before determining fifty percent
(50%) of such amount for purposes of this calculation) plus (iii) fifty percent
(50%) of the net proceeds or other consideration received by Borrower for capital stock
issued by Borrower after September 30, 2008, minus (iv) the lesser of (A) the aggregate
amount paid by Borrower after September 30, 2008 to repurchase its common stock and (B)
$300,000,000, (the foregoing covenant, as adjusted as provided in the next succeeding
sentence, is herein referred to as the “Consolidated Tangible Net Worth Test”).
Notwithstanding the foregoing, in the event that Borrower shall at any time engage in an
Acquisition for a purchase price equaling or exceeding $100,000,000, Borrower may
irrevocably elect, by notice to the Administrative Agent given prior to the last day of the
fiscal quarter in which such Acquisition occurs, to adjust minimum Consolidated Tangible Net
Worth for the Consolidated Tangible Net Worth Test to the following amount: (i) 80% of the
Consolidated Tangible Net Worth immediately following the closing of such Acquisition, plus
(ii) an amount equal to 50% of the consolidated net income of Borrower and Guarantors earned
after the closing of such Acquisition (excluding any quarter in which there is a loss but
applying net income thereafter first to such loss before determining



9









 






50% of such amount for purposes of this calculation), plus (iii) 50% of the net
proceeds or other consideration received by Borrower for any capital stock issued after the
closing of such Acquisition, minus (iv) the lesser of (A) the aggregate amount paid by
Borrower after the closing of such Acquisition to repurchase its common stock and (B) the
amount (but not less than zero) obtained by subtracting from $300,000,000 the aggregate
amount (if any) paid by Borrower to repurchase its common stock after September 30, 2008 and
prior to such Acquisition. Borrower may make the election under the preceding sentence only
if it makes the corresponding election under Section 9.3 at the same time. Borrower’s
compliance with the Consolidated Tangible Net Worth Test shall be measured on a quarterly
basis, based on the financial statements delivered to Administrative Agent pursuant to
Section 7.1. Borrower’s failure to satisfy the Consolidated Tangible Net Worth Test shall
not constitute an Event of Default or an Unmatured Event of Default; provided,
however, that if Borrower fails to satisfy the Consolidated Tangible Net Worth Test
at the end of any fiscal quarter, then the Term Out Period shall commence on the first day
following such fiscal quarter as provided in Section 2.22.



     12. Leverage Ratio. Effective as of the Amendment Effective Date, Section 9.2 of the
Credit Agreement is hereby amended and restated in its entirety as follows:




     9.2 Leverage Test; Interest Coverage Test.




     (a) Leverage Test. The Leverage Ratio shall not exceed the then applicable
Permitted Leverage Ratio (the “Leverage Test”).




     (b) Interest Coverage Test; Decrease of Permitted Leverage Ratio. If at any
time at which the Permitted Leverage Ratio is 55% Borrower shall fail to maintain, for two
(2) consecutive fiscal quarters, a ratio (the “Interest Coverage Ratio”), determined as of
the last day of each fiscal quarter for the four-quarter period ending on such day, of (i)
EBITDA for such period to (ii) Consolidated Interest Incurred for such period, of at least
2.00 to 1.0 (the “Interest Coverage Test”), then the Permitted Leverage Ratio for the same
fiscal quarter with respect to which Borrower shall have so failed the Interest Coverage
Test (i.e., the second of such two (2) consecutive fiscal quarters, which quarter is herein
referred to as the “Coverage Test Failure Quarter”), shall be decreased to 50%. In no event
shall the Permitted Leverage Ratio be less than 50%.




     (c) Increase of Permitted Leverage Ratio. If at any time at which the
Permitted Leverage Ratio is 50% Borrower shall satisfy the Interest Coverage Test (which for
purposes of this Section 9.2(c) shall be deemed satisfied only if, on the same day on which
Borrower satisfies the Interest Coverage Test, Borrower is also in compliance with the
Leverage Test), then the Permitted Leverage Ratio, effective as of the fiscal quarter
immediately following the fiscal quarter with respect to which Borrower shall have so
satisfied the Interest Coverage Test, shall be increased to 55%. In no event shall the
Permitted Leverage Ratio exceed 55%.




     (d) Effectiveness of Change in Permitted Leverage Ratio. The decrease of the
Permitted Leverage Ratio from 55% to 50% provided for in Section 9.2(b) shall be



10









 







effective as of the Coverage Test Failure Quarter as provided in Section 9.2(b), and the
Permitted Leverage Ratio of 50% shall remain in effect thereafter unless and until increased
to 55% as provided in Section 9.2(c). Any increase in the Permitted Leverage Ratio from 50%
to 55% shall be effective as of the fiscal quarter next succeeding the fiscal quarter in
which Borrower satisfies the Interest Coverage Test as provided in Section 9.2(c), and the
Permitted Leverage Ratio of 55% shall remain in effect thereafter unless and until decreased
to 50% as provided in Section 9.2(b).




     (e) Measure of Compliance. Borrower’s satisfaction of the Interest Coverage
Test shall be measured on a quarterly basis, based on the financial statements delivered to
Administrative Agent pursuant to Section 7.1. A failure to satisfy the Leverage Test or the
Interest Coverage Test shall not constitute an Event of Default or an Unmatured Event of
Default; provided, however, if Borrower fails to satisfy the Leverage Test
for two (2) consecutive fiscal quarters (the first of which may be the Coverage Test Failure
Quarter), then the Term Out Period shall commence on the day following such fiscal quarter
as provided in Section 2.22.



     13. Consolidated Tangible Net Worth Floor. Effective as of the Amendment Effective
Date, Section 9.3 of the Credit Agreement is hereby amended and restated in its entirety as
follows:




     9.3 Consolidated Tangible Net Worth Floor. Consolidated Tangible Net Worth
shall not be less than (i) $650,000,000, plus (ii) an amount equal to 50% of the quarterly
consolidated net income of Borrower and Guarantors earned after September 30, 2008
(excluding any quarter in which there is a loss but applying consolidated net income
thereafter first to such loss before determining 50% of such amount for purposes of this
calculation), plus (iii) 50% of the net proceeds or other consideration received by Borrower
for any capital stock issued after September 30, 2008. Notwithstanding the foregoing, in
the event that Borrower shall at any time engage in an Acquisition for a purchase price
equaling or exceeding $100,000,000, Borrower may irrevocably elect, by notice to the
Administrative Agent given prior to the last day of the fiscal quarter in which such
Acquisition occurs, to adjust the minimum Consolidated Tangible Net Worth for this covenant
to the following amount: (i) 50% of Consolidated Tangible Net Worth immediately following
the closing of such Acquisition, (ii) an amount equal to 50% of the consolidated net income
of Borrower and Guarantors earned after the closing of such Acquisition (excluding any
quarter in which there is a loss but applying net income thereafter first to such loss
before determining 50% of such amount for purposes of this calculation) and (iii) 50% of the
net proceeds or other consideration received by Borrower for any capital stock issued after
the closing of such Acquisition. Borrower may make the election under the preceding
sentence only if it makes the corresponding election under Section 9.1 at the same time.
Borrower’s compliance with the foregoing covenant shall be measured on a quarterly basis,
based on the financial statements delivered to Administrative Agent pursuant to Section 7.1.



     14. Cash Flow/Liquidity Test. Effective as of the Amendment Effective Date, the
following new Section 9.6 is hereby added to the Credit Agreement:



11









 






     9.6 Cash Flow/Liquidity Test. If the Borrower shall fail to maintain for any
fiscal quarter ending on and after December 31, 2008 an Interest Coverage Ratio equal to or
greater than 1.50 to 1.00 for the period of four consecutive fiscal quarters then ended,
then as of the end of such fiscal quarter and as of the end of all fiscal quarters
thereafter until the Interest Coverage Ratio is greater than or equal to 1.50 to 1.00, the
Borrower shall either maintain (i) a ratio of (A) Adjusted Cash Flow from Operations to (B)
Consolidated Interest Incurred of greater than or equal to 1.50 to 1.00 or (ii) a sum of (x)
Borrowing Base Availability plus (y) Unrestricted Cash, to the extent such Unrestricted Cash
is not included in calculating Borrowing Base Availability, less (z) principal payments due
on Consolidated Indebtedness within the next succeeding four fiscal quarters, equal to or
greater than $500,000,000 (the “Cash Flow/Liquidity Test”). Borrower’s compliance with the
Cash Flow/Liquidity Test shall be measured on a quarterly basis, based on the financial
statements delivered to Administrative Agent pursuant to Section 7.1. Borrower’s failure to
satisfy the Cash Flow/Liquidity Test shall not constitute an Event of Default or an
Unmatured Event of Default; provided, however, that if Borrower fails to satisfy the
Cash Flow/Liquidity Test at the end of any fiscal quarter, then the Term Out Period shall
commence on the first day following such fiscal quarter as provided in Section 2.22.



     15. Remedies. Effective as of the Amendment Effective Date, Section 11.1(d) of the
Credit Agreement is hereby deleted.



     16. Compliance Certificate. The form of Compliance Certificate attached as
Exhibit F to the Credit Agreement is hereby amended (a) to conform to the changes in
Sections 9.1, 9.2 and 9.3 provided for above and (b) to incorporate compliance with the Cash
Flow/Liquidity Test.



     17. Conditions Precedent. This Amendment shall be effective as of the date
(“Amendment Effective Date”) upon which the following conditions are satisfied:



     (a) The Administrative Agent shall have received from the Borrower and the Required Lenders a
counterpart of this Amendment signed on behalf of each such party.



     (b) The Administrative Agent shall have received from the Guarantors the Consent and Agreement
of Guarantors substantially in the form attached hereto as Exhibit A.



     (c) The Administrative Agent shall have received such documents and certificates as the
Administrative Agent or its counsel may reasonably request relating to the organization or
formation, existence and good standing of the Borrower, the authorization of this Amendment and any
other legal matters relating to the Borrower, the Credit Agreement or this Amendment, all in form
and substance satisfactory to the Administrative Agent and its counsel.



     (d) The Administrative Agent shall have received all fees and other amounts due and payable on
or prior to the Amendment Effective Date, including reimbursement or payment of all out-of-pocket
expenses required to be reimbursed or paid by the Borrower hereunder.



          The Administrative Agent shall notify the Borrower and the Lenders of the Amendment Effective
Date, and such notice shall be conclusive and binding.




12









 








     18. Representations and Warranties. The Borrower hereby represents and warrants that
as of the date hereof:




     (a) The representations and warranties of the Borrower in the Credit Agreement are true
and correct in all material respects.




     (b) There exists no Event of Default or Unmatured Event of Default.



     19. Release. In consideration of this Amendment, Borrower hereby fully and
unconditionally releases and forever discharges Administrative Agent and each Lender and their
respective directors, officers, employees, subsidiaries, branches, affiliates, attorneys, agents,
representatives, successors and assigns and all persons, firms, corporations and organizations
acting on their behalf (collectively, the “Released Parties”), of and from any and all
claims, allegations, causes of action, costs or demands and liabilities pertaining to or arising
out of the Credit Agreement, from the beginning of the world to the Amendment Effective Date,
whether known or unknown, liquidated or unliquidated, fixed or contingent, asserted or unasserted,
foreseen or unforeseen, matured or unmatured, suspected or unsuspected, anticipated or
unanticipated, which Borrower has, had, claims to have or to have had or hereafter claims to have
or have had against the Released Parties by reason of any act or omission on the part of the
Released Parties, or any of them, occurring prior to the Amendment Effective Date, including all
such loss or damage of any kind heretofore sustained or that may arise as a consequence of the
dealings among the parties up to and including the Amendment Effective Date, including the
administration or enforcement of the Credit Agreement (collectively, all of the foregoing are the
“Claims”). Borrower represents and warrants that it has no knowledge of any Claim against
the Released Parties or of any facts or acts or omissions of the Released Parties which on the date
hereof would be the basis of a Claim by it against the Released Parties which is not released
hereby, and Borrower represents and warrants that the foregoing constitutes a full and complete
release of all Claims by or on behalf of Borrower. The inclusion of a release provision in this
Amendment shall not give rise to any inference that but for such release, any Claim otherwise would
exist.



     20. Ratification. The Credit Agreement, as amended hereby, and the other Loan
Documents are hereby ratified and remain in full force and effect.



     21. Counterparts. This Amendment may be executed in any number of counterparts, all
of which taken together shall constitute one agreement and any of the parties hereto may execute
this Amendment by signing any such counterpart.



     22. Choice of Law. This Amendment and the other Loan Documents shall be construed in
accordance with the internal laws (but without regard to the conflict of laws provisions other than
Section 5-1401 of the New York General Obligations Law ) of the State of New York, but giving
effect to federal laws applicable to national banks.



13









 





          IN WITNESS WHEREOF, the Borrower and the undersigned Lenders have caused this Amendment to be
duly executed as of the date first above written.




	 	 	 	 	 
	 	Borrower:



M.D.C. HOLDINGS, INC.

 	 
	 	By:  	/s/ Christopher M. Anderson
 	 
	 	 	Name:  	Christopher M. Anderson 	 
	 	 	Title:  	Senior Vice President and

Chief Financial Officer 	 



14









 






	 	 	 	 	 



SIGNATURE PAGE TO THIRD AMENDMENT TO SECOND AMENDED AND

RESTATED CREDIT AGREEMENT WITH M.D.C. HOLDINGS, INC.




	 	 	 	 	 
	 	Lenders:



JPMORGAN CHASE BANK, N.A.,

As Lender and Administrative Agent

 	 
	 	By:  	/s/ Vanessa Chiu
 	 
	 	 	Name:  	Vanessa Chiu 	 
	 	 	Title:  	Vice President 	 
	 




15









 








SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.

THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT




	 	 	 	 	 
	 	WACHOVIA BANK, NATIONAL

ASSOCIATION

 	 
	 	By:  	/s/ Nathan R. Rantala
 	 
	 	 	Name:  	Nathan R. Rantala 	 
	 	 	Title:  	Director 	 



 









 






	 	 	 	 	 



SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.

THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT




	 	 	 	 	 
	 	CITICORP NORTH AMERICA, INC.

 	 
	 	By:  	/s/ Marni McManus
 	 
	 	 	Name:  	Marni McManus 	 
	 	 	Title:  	Director 	 



 









 






	 	 	 	 	 



SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.

THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT




	 	 	 	 	 
	 	THE ROYAL BANK OF SCOTLAND plc

 	 
	 	By:  	/s/ Scott MacVicar
 	 
	 	 	Name:  	Scott MacVicar 	 
	 	 	Title:  	Vice President 	 



 









 






	 	 	 	 	 



SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.

THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT




	 	 	 	 	 
	 	SUNTRUST BANK

 	 
	 	By:  	/s/ W. John Wendler
 	 
	 	 	Name:  	W. John Wendler 	 
	 	 	Title:  	Senior Vice President 	 



 









 






	 	 	 	 	 



SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.

THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT




	 	 	 	 	 
	 	U.S. BANK NATIONAL ASSOCIATION

 	 
	 	By:  	/s/ Sandra A. Sauer
 	 
	 	 	Name:  	Sandra A. Sauer 	 
	 	 	Title:  	Vice President 	 



 









 






	 	 	 	 	 



SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.

THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT




	 	 	 	 	 
	 	BANK OF AMERICA, N.A.

 	 
	 	By:  	/s/ Eyal Namordi
 	 
	 	 	Name:  	Eyal Namordi 	 
	 	 	Title:  	Senior Vice President 	 



 









 






	 	 	 	 	 



SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.

THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT




	 	 	 	 	 
	 	GUARANTY BANK

 	 
	 	By:  	/s/ Dan Killian
 	 
	 	 	Name:  	Dan Killian 	 
	 	 	Title:  	Sr. Vice President 	 
	 




 












 





SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.

THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT



JPMorgan Chase Bank, N.A. is the purchaser of the Commitment and Loans under the Credit Agreement
referenced above from the Federal Deposit Insurance Corporation acting as receiver for Washington
Mutual Bank, formerly known as Washington Mutual Bank, F.A. and is the successor owner of the
Commitment and Loans.




	 	 	 	 	 
	 	JPMORGAN CHASE BANK, N.A.

 	 
	 	By:  	/s/ Gary Handcox
 	 
	 	 	Name:  	Gary Handcox 	 
	 	 	Title:  	Senior Vice President 	 



 









 






	 	 	 	 	 



SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.

THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT




	 	 	 	 	 
	 	BNP PARIBAS

 	 
	 	By:  	/s/ Curt Price
 	 
	 	 	Name:  	Curt Price 	 
	 	 	Title:  	Managing Director 	 
	 
	 	 	 
	 	By:  	                            /s/ Andy Strait
 	 
	 	 	Name:  	Andy Strait 	 
	 	 	Title:  	Managing Director 	 



 









 






	 	 	 	 	 



SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.

THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT




	 	 	 	 	 
	 	CALIFORNIA BANK & TRUST

 	 
	 	By:  	/s/ Paul H. Bodek
 	 
	 	 	Name:  	Paul H. Bodek 	 
	 	 	Title:  	Vice President 	 



 









 






	 	 	 	 	 



SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.

THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT




	 	 	 	 	 
	 	COMERICA BANK

 	 
	 	By:  	/s/ Adam Sheets
 	 
	 	 	Name:  	Adam Sheets 	 
	 	 	Title:  	Assistant Vice President 	 



 









 






	 	 	 	 	 



SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.

THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT




	 	 	 	 	 
	 	REGIONS BANK

 	 
	 	By:  	/s/ Daniel McClurkin
 	 
	 	 	Name:  	Daniel McClurkin 	 
	 	 	Title:  	Vice President 	 



 









 






	 	 	 	 	 



SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.

THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT




	 	 	 	 	 
	 	BANK OF THE WEST, a California

banking corporation

 	 
	 	By:  	/s/ Jan Manista
 	 
	 	 	Name:  	Jan Manista 	 
	 	 	Title:  	Vice President 	 



 









 






	 	 	 	 	 



SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.

THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT




	 	 	 	 	 
	 	CALYON NEW YORK BRANCH

 	 
	 	By:  	/s/ Robert Smith
 	 
	 	 	Name:  	Robert Smith 	 
	 	 	Title:  	Managing Director 	 
	 
	 	 	 
	 	By:  	                         /s/ David Cagle
 	 
	 	 	Name:  	David Cagle 	 
	 	 	Title:  	Managing Director 	 



 









 






	 	 	 	 	 



SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.

THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT




	 	 	 	 	 
	 	KEYBANK NATIONAL ASSOCIATION

 	 
	 	By:  	/s/ Candice King
 	 
	 	 	Name:  	Candice King 	 
	 	 	Title:  	Vice President 	 



 









 






	 	 	 	 	 



SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.

THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT




	 	 	 	 	 
	 	MIZUHO CORPORATE BANK, LTD.

 	 
	 	By:  	/s/ Noel P. Purcell
 	 
	 	 	Name:  	Noel P. Purcell 	 
	 	 	Title:  	Authorized Signatory 	 



 









 






	 	 	 	 	 



SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.

THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT




	 	 	 	 	 
	 	NATIXIS

 	 
	 	By:  	/s/ Natalie Trojan
 	 
	 	 	Name:  	Natalie Trojan 	 
	 	 	Title:  	Director 	 
	 
	 	 	 
	 	By:  	                   /s/ Timothée Delpont
 	 
	 	 	Name:  	Timothée Delpont 	 
	 	 	Title:  	Associate 	 



 









 






	 	 	 	 	 



SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.

THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT




	 	 	 	 	 
	 	PNC BANK, NATIONAL ASSOCIATION

 	 
	 	By:  	/s/ Douglas G. Paul
 	 
	 	 	Name:  	Douglas G. Paul 	 
	 	 	Title:  	Senior Vice President 	 



 









 






	 	 	 	 	 



SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.

THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT




	 	 	 	 	 
	 	RBC BANK (USA)

 	 
	 	By:  	/s/ Traniece Peterson
 	 
	 	 	Name:  	Traniece Peterson 	 
	 	 	Title:  	Vice President 	 



 









 






	 	 	 	 	 



SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.

THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT




	 	 	 	 	 
	 	CITY NATIONAL BANK

 	 
	 	By:  	/s/ Xavier Barrera
 	 
	 	 	Name:  	Xavier Barrera 	 
	 	 	Title:  	Vice President 	 



 









 






	 	 	 	 	 



SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.

THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT




	 	 	 	 	 
	 	COMPASS BANK

 	 
	 	By:  	/s/ Larry A. Olsen
 	 
	 	 	Name:  	Larry A. Olsen 	 
	 	 	Title:  	EVP 	 



 









 






	 	 	 	 	 



SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.

THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT




	 	 	 	 	 
	 	FIFTH THIRD BANK

 	 
	 	By:  	/s/ Garland Robeson
 	 
	 	 	Name:  	Garland Robeson 	 
	 	 	Title:  	Assistant Vice President 	 



 









 






	 	 	 	 	 



Exhibit A to Amendment




CONSENT AND AGREEMENT OF GUARANTORS





     THIS CONSENT AND AGREEMENT OF GUARANTORS (“Consent”) is executed and delivered as of December
22, 2008, by the undersigned (the “Guarantors”), in favor of the “Lenders” under that certain
Second Amended and Restated Credit Agreement dated March 22, 2006, among M.D.C. Holdings, Inc., the
Lenders from time to time parties thereto and JPMorgan Chase Bank, N.A., in its capacity as
Administrative Agent. Such Second Amended and Restated Credit Agreement, as it has been and may be
amended, modified or supplemented from time to time, is hereinafter referred to as the “Credit
Agreement.” Unless otherwise defined herein, capitalized terms used herein shall have the meanings
ascribed to them in the Credit Agreement.



WITNESSETH:




     WHEREAS, the Guarantors have executed and delivered a Second Amended and Restated Guaranty
dated March 22, 2006 in favor of the Lenders under the Credit Agreement (the “Guaranty”); and



     WHEREAS, the Borrower, the Administrative Agent and the Required Lenders have entered into
that certain Third Amendment to Second Amended and Restated Credit Agreement of even date herewith
amending the Credit Agreement (the “Amendment”); and



     WHEREAS, it is a condition to the Amendment that the Guarantors shall have executed this
Consent;



     NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Guarantors hereby consent to the Amendment and agree that the Guaranty
continues in full force and effect with respect to the undersigned Guarantors and further confirm
that the representations and warranties of Guarantors under the Guaranty are true and correct in
all material respects as of the date hereof.



 









 





     IN WITNESS WHEREOF, this Consent has been duly executed by the Guarantors as of the day and
year first set forth above.



[Guarantors]