Exhibit 10.2

 

LOGO [g73568image001.jpg]

 

FIRST AMENDMENT TO AMENDED AND

RESTATED REVOLVING LINE OF CREDIT LOAN AGREEMENT

 

THIS FIRST AMENDMENT TO AMENDED AND RESTATED REVOLVING LINE OF CREDIT LOAN
AGREEMENT (“Agreement”), dated as of July 19, 2005, by and between WILLIAM LYON
HOMES, INC., a California corporation (“Borrower”), and CALIFORNIA BANK & TRUST,
a California banking corporation (“Lender”), with reference to the following
facts:

 

RECITALS

 

A. Borrower originally agreed to borrow a sum not to exceed Fifty Million
Dollars ($50,000,000.00) (“Loan”) from Lender for the purpose of providing
Borrower with funding for the acquisition and development of residential lots,
the construction of existing and future residential home projects, and the
issuance of letters of credit for the payment of costs incurred or associated
with said projects. The terms and conditions of the Loan are more particularly
set forth in that certain Amended and Restated Revolving Line of Credit Loan
Agreement dated as of September 16, 2004, by and between Borrower and Lender (as
the same has been or may be amended or modified from time to time, Loan
Agreement”). All capitalized terms not specifically defined herein shall have
the meanings given to such terms in the Loan Agreement.

 

B. The Loan is evidenced by a Third Amended and Restated Construction Loan
Promissory Note dated for reference purposes as of September 16, 2004, given by
Borrower to Lender (as the same has been and may be amended from time to time,
“Current Note”).

 

C. The Loan is secured by, among other things, the “Deed of Trust” (as defined
in the Loan Agreement).

 

D. This Agreement, the Current Note and the other documents evidencing or
relating to the Loan collectively shall be referred to as the “Loan Documents.”

 

E. Borrower has requested that Lender modify the Loan by, among other things,
increasing (i) the maximum amount of the Loan, (ii) the maximum “Commitment
Amount” (as defined in the Loan Agreement), and (iii) the face amount of the
Current Note, from Fifty Million Dollars ($50,000,000.00) to Seventy Million
Dollars ($70,000,000.00) (“New Commitment Amount”).

 

F. Lender is willing to consent to the modifications to the Loan Documents set
forth herein and in those certain amendments to deeds of trust of even date
herewith executed by Borrower and Lender modifying each Deed of Trust
(collectively, “Recorded Amendments”), subject to the conditions set forth
below. The date on which all Recorded Amendments are recorded in the applicable
official records for the applicable counties shall be referred to as the
“Modification Closing Date.”

 

1

--------------------------------------------------------------------------------

TERMS AND CONDITIONS

 

NOW, THEREFORE, in consideration of the foregoing premises and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

 

1. Recitals. The preamble, recitals and any exhibits hereto are hereby
incorporated into this Agreement.

 

2. Increase in the Loan Amount.

 

2.1 Increase in the Maximum Commitment Amount. From and after the Modification
Closing Date, the maximum amount of the Loan and the maximum Commitment Amount
are hereby increased from the current amount of Fifty Million Dollars
($50,000,000.00) to the New Commitment Amount of Seventy Million Dollars
($70,000,000.00). All references in the Loan Documents to the maximum amount of
Loan and maximum Commitment Amount shall be revised to refer to the New
Commitment Amount set forth herein.

 

2.2 Increase in the Amount of the Current Note. As a result of the increase in
the amount of the Loan and the maximum Commitment Amount, the face amount of the
Current Note shall be increased from the present amount of Fifty Million Dollars
($50,000,000.00) to the New Commitment Amount of Seventy Million Dollars
($70,000,000.00) (“New Note Amount”). All references in the Loan Documents to
the face amount of the Current Note shall be revised to refer to the New Note
Amount set forth herein.

 

2.3 Amendment and Restatement of the Current Note. Borrower shall execute and
deliver to Lender a Fourth Amended and Restated Promissory Note of even date
herewith (the Current Note, as amended by said document, shall hereafter be
referred to as the “Note”) evidencing the increase in the amount of the Loan and
the maximum Commitment Amount as described herein. All references in the Loan
Documents to the Current Note shall be revised to refer to the Note, as amended
and restated.

 

3. Amendment to Definitions in Loan Agreement.

 

3.1 Commitment Amount. The definition of “Commitment Amount” set forth in the
Loan Agreement shall be replaced with the following:

 

“Commitment Amount” means (a) during the Initial Line Term, the sum of Seventy
Million Dollars ($70,000,000.00), and (b) during the Reduction Period, beginning
upon the last day of the first Calendar Quarter following the Initial Line
Maturity Date, and on or prior to the last day of each Calendar Quarter
thereafter during the Reduction Period, the Commitment Amount shall be reduced
in the minimum amount of Eight Million Seven Hundred Fifty Thousand Dollars
($8,750,000.00) (each, “Reduced Commitment Amount”):

 

Date

--------------------------------------------------------------------------------

   Reduced
Commitment
Amount

--------------------------------------------------------------------------------

Initial Line Maturity Date

   $ 70,000,000.00

First Calendar Quarter

   $ 61,250,000.00

Second Calendar Quarter

   $ 52,500,000.00

Third Calendar Quarter

   $ 43,750,000.00

Fourth Calendar Quarter

   $ 35,000,000.00

Fifth Calendar Quarter

   $ 26,250,000.00

Sixth Calendar Quarter

   $ 17,500,000.00

Seventh Calendar Quarter

   $ 8,750,000.00

Eighth Calendar Quarter

   $ 0.00

 

2

--------------------------------------------------------------------------------

3.2 Maximum Aggregate Loan Allocation(s). The definition of Maximum Aggregate
Loan Allocation(s) shall be replaced with the following:

 

“Maximum Aggregate Loan Allocation(s)” shall mean each and every one of the
following:

 

(a) With respect to all Qualified Projects included in the Borrowing Base
(collectively or individually “Geographic Concentration Limitation”):

 

(1) The aggregate Loan Allocations for all Lots and/or Homes for Qualified
Projects (whether Advances have been made and/or have been committed but have
not yet advanced) located in the State of Arizona shall not exceed the sum of
Twenty-Five Million Dollars ($25,000,000.00); and/or

 

(2) The aggregate Loan Allocations for all Lots and/or Homes for Qualified
Projects (whether Advances have been made and/or have been committed but have
not yet advanced) located in the State of Nevada shall not exceed the sum of
Twenty-Five Million Dollars ($25,000,000.00).

 

(b) With respect to all Lots to be included in the Borrowing Base, the aggregate
Loan Allocations for all Entitled Land, Lots Under Development and Developed
Lots for all Qualified Projects (whether Advances have been made and/or have
been committed but have not yet advanced) shall not exceed the sum of
Twenty-Eight Million Dollars ($28,000,000.00) (“Lot Concentration Limitation”).

 

(c) With respect to all Spec Homes to be included in the Borrowing Base (“Spec
Home Concentration Limitation”):

 

(1) For all Qualified Projects financed hereunder, the aggregate Loan
Allocations for all Spec Homes for all said Projects (whether Advances have been
made and/or have been committed but have not yet advanced) shall not exceed the
sum of Sixteen Million Eight Hundred Thousand Dollars ($16,800,000.00); and/or

 

(2) For each and every Qualified Project financed hereunder, the total number of
Spec Homes shall not exceed (A) for the first phase of any Qualified Project,
twenty-five (25), or (B) for all subsequent phases of any Qualified Project, the
lesser of twenty-five (25) or four (4) months’ actual absorption for the subject
Project, as determined by Lender from time to time based upon the actual prior
six-month Home sales average for said Project.

 

4. Amendment to Deed of Trust. Each Deed of Trust shall be amended to secure the
obligations under the Note and the other Loan Documents, as amended herein.

 

3

--------------------------------------------------------------------------------

5. Conditions Precedent. In no event shall Lender have any obligation to close
this transaction unless and until all of the following conditions are satisfied:

 

5.1 No Defaults. There shall be no: (a) uncured, material default hereunder or
under the Loan Documents; (b) continuing representation, covenant or warranty
hereunder or under the Loan Documents that is false or misleading in any manner;
and (c) event currently existing which, with the passage of time, will result in
a material default or the falsity of any continuing representation, covenant or
warranty hereunder or under the Loan Documents.

 

5.2 No Financial Change. There has been no material adverse change in
Borrower’s, financial condition since the closing of the Loan.

 

5.3 Payment Of Lender’s Costs. Borrower shall pay all of Lender’s costs and
expenses incurred in connection with the documentation and closing of the
modifications to the Loan Documents described herein, including without
limitation all attorneys’ fees and other closing fees and costs.

 

5.4 Title Endorsement. Issuance to Lender of a CLTA Form 110.10 endorsement (or
any substantially equivalent endorsement(s) as reasonably approved by Lender) to
each ALTA Lender’s Title Policy for each Deed of Trust in form satisfactory to
Lender and insuring the continued first lien priority of the Deed of Trust,
except for such exceptions as may be approved by Lender in its sole discretion.

 

5.5 Additional Documents. Lender shall have received all additional documents
executed by Borrower, as required by Lender in connection with this Agreement,
including, without limitation, the Note and all Recorded Amendments.

 

6. Representations and Warranties. Borrower hereby represents and warrants to
Lender as follows:

 

6.1 No Default. No default or event of default under any of the Loan Documents
has occurred that remains uncured, and no event has occurred which, with the
giving of notice or the passage of time, or both, would constitute a default or
an event of default under any of the Loan Documents.

 

6.2 Representations and Warranties. As of the date hereof, all of the warranties
and representations contained in all of the Loan Documents remain true, correct,
complete and accurate.

 

6.3 No Claims or Defenses. As of the date hereof, neither Borrower nor its
managing member has any claims against Lender nor defenses to the enforcement of
any of the Loan Documents in accordance with their respective terms, as amended
by this Agreement.

 

6.4 Financial Covenants. Borrower acknowledges and agrees that the financial
covenants contained in the Loan Documents are in full force and effect and shall
be monitored by Lender based on the financial reports to be provided under the
Loan Agreement.

 

6.5 Satisfaction of Conditions. All of the conditions precedent set forth above
have been fully satisfied.

 

7. Further Assurances. Borrower agrees to perform such other and further acts,
and to execute such additional documents, agreements, notices or financing
statements, as Lender deems necessary or desirable from time to time to create,
preserve, continue, perfect, validate or carry out any of Lender’s rights under
this Agreement and the other Loan Documents.

 

4

--------------------------------------------------------------------------------

8. Integration. All rights, remedies, powers and interest provided for Lender
herein are in addition to the rights, remedies, powers and interests provided
for Lender in the Loan Documents, the terms and provisions of which are
incorporated herein by this reference and made a part hereof. If and to the
extent any term or provision hereof is inconsistent with any term or provision
of the Loan Documents, the term or provision of this Agreement shall prevail.

 

9. Entire Agreement; Amendments. This Agreement and the other Loan Documents
contain the entire agreement between Borrower and Lender with respect to the
Loan Documents, and all prior negotiations, commitments, understandings and
agreements are superseded by this Agreement and the Loan Documents. No
amendment, modification, supplement, extension, termination or waiver of any
provision of this Agreement, any Loan Document, or any other agreement executed
in connection with any of the foregoing shall be effective unless in writing and
signed by Lender and Borrower, and then only in the specific instance and for
the specific purpose given.

 

10. Governing Law. The Loan Documents shall be governed by, and construed and
enforced in accordance with, the internal laws of the State of California,
without regard to its conflict of laws principles.

 

11. Section Headings. The section headings of this Agreement are included for
convenience only, and shall not affect the construction or interpretation of any
provision of this Agreement.

 

12. Attorneys’ Fees. If any action or other proceeding is brought to interpret
or enforce any provision of this Agreement, the prevailing party shall be
entitled to recover attorneys’ fees and expenses.

 

13. Binding Effect. This Agreement and the other Loan Documents shall be binding
upon, and shall inure to the benefit of, Borrower and Lender and their
respective successors and assigns, or heirs and personal representatives, as
applicable, subject to any provision of the Loan Documents restricting transfers
of the Property.

 

14. Severability of Provisions. No provision of this Agreement or any other Loan
Document that is held to be inoperative, unenforceable and invalid shall affect
the remaining provisions, and this and all provisions of this Agreement and the
Loan Documents are hereby declared to be severable.

 

15. Miscellaneous. No reference to this Agreement is necessary in any instrument
or document at any time referring to the Loan Documents. A reference to the Loan
Documents shall be deemed a reference to such document as modified hereby.

 

16. No Commitment. The furnishing of this Agreement and other modification
documents shall in no way be construed as a commitment by Lender to modify,
amend, extend or otherwise alter the Loan Documents. Lender shall be under no
obligation to close the transaction evidenced by this Agreement unless this
Agreement and all related documents are returned to Lender fully executed by
Borrower, and unless this Agreement is actually executed by Lender and delivered
to Borrower.

 

17. No Other Amendments. Except as expressly amended herein, the Loan Agreement,
and all of the other Loan Documents remain unmodified and in full force and
effect.

 

18. Counterparts. This Agreement may be executed in any number of counterparts
and by different parties hereto on separate counterparts, each of which, when so
executed and delivered shall be an original, but all such counterparts shall
together constitute one and the same instrument.

 

5

--------------------------------------------------------------------------------

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

6

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, this Agreement has been executed by Borrower and Lender as
of the date first above written.

 

BORROWER: WILLIAM LYON HOMES, INC., a California corporation

By:

  /s/ Richard S. Robinson

Name:

 

Richard S. Robinson

Title:

 

Senior Vice President

By:

  /s/ Michael D. Grubbs

Name:

 

Michael D. Grubbs

Title:

 

Senior Vice President

LENDER: CALIFORNIA BANK & TRUST, a California banking corporation

By:

  /s/ Erin Johnson

Name:

 

Erin Johnson

Its:

 

Vice President

 

Signature Page 1