Exhibit 10.8

WILLIAM LYON HOMES

CONVERTIBLE PREFERRED STOCK

AND CLASS C COMMON STOCK

SUBSCRIPTION AGREEMENT

February 25, 2012

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TABLE OF CONTENTS

 

              Page   1.  

Agreement to Sell and Purchase

     2      1.1.   

Authorization of Shares

     2      1.2.   

Subscription

     2    2.  

Closing, Delivery and Payment

     2      2.1.   

Closing

     2      2.2.   

Delivery

     3      2.3.   

Registration Rights

     3    3.  

Representations and Warranties of the Company

     3      3.1.   

Organization, Good Standing and Qualification

     3      3.2.   

Capitalization

     3      3.3.   

Authorization; Binding Obligations

     4      3.4.   

No Contravention

     5      3.5.   

Licenses

     5      3.6.   

Environmental

     5      3.7.   

Compliance with Laws and Regulations

     5      3.8.   

Solicitation Package and Plan Supplement

     5      3.9.   

Investment Company Act

     6      3.10.   

No Material Actions or Proceedings

     6      3.11.   

Governmental Authorization; Third Party Consents

     6    4.  

Representations and Warranties of the Subscriber

     6      4.1.   

Requisite Power and Authority

     6      4.2.   

Investment Representations

     6    5.  

Conditions to Closing

     7   

 

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              Page     5.1.   

Conditions to Obligations of the Subscriber at Closing

     7      5.2.   

Conditions to Obligations of the Company at Closing

     8      5.3.   

Conditions to Obligations of the Company and of the Subscriber at Closing

     8    6.  

Covenants

     9      6.1.   

Reasonable Assurances

     9    7.  

Miscellaneous

     9      7.1.   

Governing Law

     9      7.2.   

Survival

     9      7.3.   

Successors and Assigns

     10      7.4.   

Entire Agreement; Backstop Commitment Letter Not Superseded

     10      7.5.   

Severability

     10      7.6.   

Amendment

     10      7.7.   

Termination

     10      7.8.   

Remedies

     10      7.9.   

Delays or Omissions

     10      7.10.   

Notices

     11      7.11.   

Titles and Subtitles

     11      7.12.   

Counterparts

     11      7.13.   

Broker’s Fees

     11      7.14.   

Pronouns

     11      7.15.   

Taxes

     11      7.16.   

No Presumption

     11      7.17.   

Nature of Subscribers’ Obligations and Rights

     12   

 

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WILLIAM LYON HOMES

CONVERTIBLE PREFERRED STOCK AND CLASS C COMMON STOCK

SUBSCRIPTION AGREEMENT

This CONVERTIBLE PREFERRED STOCK AND CLASS C COMMON STOCK SUBSCRIPTION AGREEMENT
(this “Agreement”) is made and entered into as of February 25, 2012, by and
between WILLIAM LYON HOMES, a Delaware corporation (the “Company”) and the
undersigned subscriber (the “Subscriber”).

RECITALS

Whereas, the Company, in order to reorganize its capital structure pursuant to a
prepackaged joint plan of reorganization, contemplates engaging in an exchange
offer of the Company’s outstanding senior notes, an issuance of new stock to the
Company’s current equity holders, and a rights offering (the “Rights Offering”)
pursuant to which this Agreement is being executed, each as more precisely
described in the Disclosure Statement for the Prepackaged Joint Plan of
Reorganization for William Lyon Homes, et al. and the Prepackaged Joint Plan of
Reorganization for William Lyon Homes, et al., both dated as of November 17,
2011 and all schedules, exhibits and other documents attached thereto
(collectively, the “Solicitation Package”, and such transactions constituting
the “Capital Restructuring”) (capitalized terms not otherwise defined herein
shall have the meaning set forth in the Solicitation Package);

Whereas, in connection with the Capital Restructuring, the Company has
authorized the issuance and sale of (i) 64,831,831 shares of its Convertible
Preferred Stock, par value $0.01 per share (the “Convertible Preferred Shares”)
and (ii) 12,966,366 shares of its Class C Common Stock, par value $0.01 per
share (the “Class C Shares” and, together with the Convertible Preferred Shares,
the “Offered Shares”) pursuant to the Rights Offering in exchange for an
aggregate cash purchase price of $60 million, and the Company has authorized the
issuance of an additional 64,831,831 Class C Shares upon conversion of the
Convertible Preferred Shares and the issuance of 77,798,197 shares of the
Company’s Class A Common Stock, par value $0.01 per share upon conversion of the
Offered Shares (collectively, the “Conversion Shares” and, together with the
Offered Shares, the “Stock”);

Whereas, the Backstop Investors and the Company have entered into a Backstop
Commitment Letter dated as of November 4, 2011 (the “Backstop Commitment
Letter”), pursuant to which the Backstop Investors have agreed to purchase any
Offered Shares not otherwise purchased in connection with the Rights Offering;
and

Whereas, Subscriber has received a subscription form (the “Subscription Form”)
and desires to purchase up to the number of Offered Shares indicated as
Subscriber’s committed number of shares on the Subscriber’s Subscription Form;

Whereas, in accordance with the procedures, terms and conditions set forth in
the Subscription Form, the number of Offered Shares to be allocated to the
Subscriber in the Rights Offering may be reduced, and the Bid Report Sheet to be
sent by the Company to the Subscriber shall set forth the final number of
Offered Shares to be purchased by Subscriber

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(including, in the case of the Bid Report Sheet to a Backstop Investor, the
number of Offered Shares to be sold to it pursuant to the terms of the Backstop
Commitment Letter) (the “Committed Shares”);

Whereas, the Company desires to issue and sell to Subscriber the Committed
Shares, and the Subscriber wishes to purchase the Committed Shares from the
Company on the terms and conditions set forth in the Subscription Form and
herein.

AGREEMENT

Now, therefore, in consideration of the foregoing recitals and the mutual
promises, representations, warranties, and covenants hereinafter set forth and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:

 

  1. AGREEMENT TO SELL AND PURCHASE.

1.1. Authorization of Shares. On or prior to Closing (as defined in Section 2.1
below), the Company shall have authorized the issuance and sale to Subscriber of
the Committed Shares upon the terms and conditions set forth in the Subscription
Form and in this Agreement, and the Company shall have authorized the issuance
of and reserved the Conversion Shares issuable upon conversion of the
Convertible Preferred Stock. The Stock, when issued, shall have the rights,
preferences, privileges and restrictions set forth in the Amended and Restated
Certificate of Incorporation of the Company (the “Restated Charter”).

1.2. Subscription. Subject to the terms and conditions hereof, the Subscriber
hereby irrevocably subscribes for the Committed Shares, payable as described in
Section 2.2 hereof. The Subscriber acknowledges that the Stock will be subject
to restrictions on transfer as set forth in this Agreement; and, in the event
that the Rights Offering is oversubscribed, the amount bid by the Subscriber on
the Subscription Form may be reduced in accordance with the procedures set forth
in the Subscription Form. The number of Convertible Preferred Shares and Class C
Shares in the Committed Shares shall be set such that the ratio of the
Convertible Preferred Shares in the Committed Shares to Class C Shares in the
Committed Shares shall be equal to the ratio of the total number of Convertible
Preferred Shares being sold in the Rights Offering to the total number of Class
C Shares being sold in the Rights Offering. The aggregate purchase price payable
by the Subscriber for the Committed Shares shall be equal to the aggregate
purchase price amount allocated to the Subscriber in the Bid Report Sheet. The
purchase price of the Convertible Preferred Shares and the Class C Shares is
$0.771226 per share.

 

  2. CLOSING, DELIVERY AND PAYMENT.

2.1. Closing. The closing of the purchase and sale of the Committed Shares (“the
Closing”) shall take place immediately following the satisfaction or waiver of
all conditions precedent described in Section 5 at the offices of Irell &
Manella LLP, 840 Newport Center Drive, Suite 400, Newport Beach, California
92660, or at such other time or place as the Company and the Subscriber may
mutually agree.

 

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2.2. Delivery. Prior to or on the Bid Remittance Deadline (as defined in the
Subscription Form), Subscriber shall pay to the Company the aggregate purchase
price for the Committed Shares by wire transfer of immediately available funds
in the amount set forth on the Bid Report Sheet. At the Closing, subject to the
terms and conditions hereof, the Company will deliver to Subscriber certificates
representing the number of Committed Shares to be sold to the Subscriber, each
bearing an appropriate legend referring to the fact that the Committed Shares
were sold in reliance upon an exemption from registration under the Securities
Act.

2.3. Registration Rights. At or prior to the Closing, the Company shall enter
into the Convertible Preferred Stock and Class C Common Stock Registration
Rights Agreement (the “Registration Rights Agreement”) substantially in the form
attached hereto as Exhibit A.

 

  3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

The Company hereby represents and warrants to the Subscriber as of the date of
mutual execution of this Agreement:

3.1. Organization, Good Standing and Qualification. The Company and each of the
Debtors listed on Plan Schedule 1 (each a “Subsidiary” and together the
“Subsidiaries”) are entities duly organized, validly existing and in good
standing under the laws of the state of their respective organization. The
Company and each of its Subsidiaries have all requisite corporate or entity
power and authority to own, lease and operate their respective properties and
assets, and to carry on their respective businesses as presently conducted and
as presently proposed to be conducted. The Company has all requisite corporate
power and authority to own, lease and operate its properties and assets, to
execute and deliver this Agreement, to issue and sell the Stock, to issue the
Conversion Shares upon conversion of the Convertible Preferred Shares, to
consummate the Rights Offering, and to carry out the provisions of this
Agreement and the Registration Rights Agreement. The Company and each of its
Subsidiaries are duly qualified in, and are authorized to do business and are in
good standing as a foreign corporation or entity in, all jurisdictions in which
the nature of their respective activities and of their properties (both owned
and leased) makes such qualification necessary, other than where the failure to
be so qualified would not, individually or in the aggregate, have a Material
Adverse Effect. For purposes of this Agreement, “Material Adverse Effect” shall
mean a material adverse change in the assets, liabilities, business, operations
or condition (financial or otherwise) of the Company and its subsidiaries taken
as a whole (provided, however, that the Chapter 11 Cases and the events leading
to the Chapter 11 Cases or resulting directly or indirectly therefrom, in and of
themselves, shall not be deemed to give rise to a Material Adverse Effect).

3.2. Capitalization.

(a) The authorized capital stock of the Company, immediately after giving effect
to the transactions contemplated by the Plan, shall be as set forth in the
Restated Charter, a copy of which has been provided to Subscriber.

 

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(b) All of the issued and outstanding shares of the capital stock of the
Company, as of the Closing, will have been duly authorized, validly issued,
fully paid and non-assessable and not subject to, or were issued in compliance
with, any preemptive or similar rights, including, but not limited to, those
created by statute, the Company’s organizational documents or any agreements to
which the Company was or is party or is bound.

(c) Other than the agreements between the Company and the subscribers in the
Rights Offering (which are identical in form to this Agreement) or as described
in the Subscription Form, the Solicitation Package or Plan Supplement, (i) there
are no outstanding options, warrants, rights (including conversion rights,
preemptive or similar rights, rights of first refusal, and registration rights),
proxy or shareholder agreements, or agreements, arrangements or commitments of
any kind for the purchase or acquisition from the Company of any issued or
unissued securities; (ii) there are no obligations, contingent or otherwise, of
the Company to repurchase, redeem or otherwise acquire any shares of the capital
stock of, or other equity interests in, the Company; and (iii) there are no
voting trusts, proxies or other agreements or understandings to which the
Company is a party or by which the Company is bound with respect to the voting
of any shares of the capital stock of the Company.

(d) The rights, preferences, privileges and restrictions of the Stock are as
stated in the Restated Charter. The Stock has been duly authorized and when
issued, delivered and paid for in compliance with the provisions of this
Agreement and the Restated Charter, the Stock will be validly issued, fully paid
and non-assessable, and will be free and clear of all security interests, liens,
claims, pledges, agreements, limitations on voting rights, charges or other
encumbrances of any nature whatsoever (collectively, “Liens”), except as
contemplated by the Restated Charter, and will not be subject to, or will have
been issued in compliance with, any preemptive or similar rights; provided,
however, that the Committed Shares may be subject to restrictions on transfer
under state or federal securities laws as set forth herein or as otherwise
required by such laws at the time a transfer is proposed.

(e) Assuming the accuracy of the representations and warranties and compliance
with the covenants of the Subscriber set forth in this Agreement, the Stock will
not be issued in violation of the Securities Act of 1933, as amended (the
“Securities Act”), or any other applicable laws (including state “blue sky”
laws).

3.3. Authorization; Binding Obligations. All corporate action on the part of the
Company, its officers, directors and shareholders necessary for the
authorization of this Agreement and the Registration Rights Agreement, the
performance of all obligations of the Company hereunder, in connection with the
Rights Offering and in connection with the Registration Rights Agreement, and
the authorization, sale, issuance and delivery of the Stock pursuant hereto have
been taken or will be taken prior to Closing. This Agreement and the
Registration Rights Agreement have been duly and validly executed and delivered
by the Company and, assuming the due authorization, execution and delivery
thereof by Subscriber, will be valid and binding obligations of the Company
enforceable in accordance with its terms, except as limited by (a) applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors’ rights, and (b) general
principles of equity that restrict the availability of equitable remedies.

 

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3.4. No Contravention. Except for the approvals required under the Chapter 11
Cases, the execution, delivery and performance of this Agreement and the
Registration Rights Agreement by the Company, including the issuance and sale of
shares of the Stock and the consummation of the transactions contemplated
hereunder and thereunder, (i) do not contravene with or result in the breach of
any provision of the Company’s organizational documents; (ii) except as set
forth in Schedule 3.4 hereto, do not violate, conflict with or result in any
breach or contravention of, or constitute an event of default (or an event which
with notice or lapse of time or both would become a default), or give rise to
any right of termination, acceleration or cancellation under, or the creation of
any material Liens under, any agreement to which the Company is a party or by or
to which the Company is, or the Stock are or may be, bound or subject; (iii) do
not violate any law or order of any federal, state, local or foreign government
or political subdivision thereof, or any agency or instrumentality of such
government or political subdivision, or any self-regulated organization or other
non-governmental regulatory authority or quasi-governmental authority, or any
arbitrator, court or tribunal of competent jurisdiction (“Governmental
Authority”) applicable to the Company or to the Stock; and (iv) do not result in
the creation of any Lien upon the Stock.

3.5. Licenses. Except as set forth in the Solicitation Package or the Plan
Supplement, and except as would have a Material Adverse Effect, the Company and
each of its Subsidiaries possess adequate licenses, certificates, authorities or
permits issued by appropriate governmental agencies or bodies necessary to
conduct the business now operated by it and its Subsidiaries.

3.6. Environmental. Except as set forth in the Solicitation Package or the Plan
Supplement, neither the Company nor any of its Subsidiaries is in violation of
any statute, rule, regulation, decision or order of any governmental agency or
body or any court, domestic or foreign, relating to the use, disposal or release
of hazardous or toxic substances or relating to the protection or restoration of
the environment or human exposure to hazardous or toxic substances
(collectively, “Environmental Laws”), owns or operates any real property
contaminated with any substance that is subject to any Environmental Laws, is
liable for any off-site disposal or contamination pursuant to any Environmental
Laws, or is subject to any pending claim or any pending investigation relating
to any Environmental Laws, which violation, contamination, liability, claim or
other matter would individually or in the aggregate reasonably be expected to
have a Material Adverse Effect.

3.7. Compliance with Laws and Regulations. Neither the Company nor any of its
Subsidiaries is in violation of any applicable law, ordinance, statute, rule,
regulation, decision or order of any governmental agency or body or any court,
domestic or foreign, applicable to the Company or any of its Subsidiaries, which
violation would, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.

3.8. Solicitation Package and Plan Supplement. The Solicitation Package and the
Plan Supplement(s) that are filed with the Bankruptcy court (including documents
filed as exhibits or schedules), as of their respective dates or as of the
Closing Date, do not, taken together, contain an untrue statement of material
fact or omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.

 

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3.9. Investment Company Act. The Company is not, and after receipt of payments
in respect of the Purchased Amounts, will not be an “investment company” within
the meaning of the Investment Company Act of 1940, as amended, (the “Investment
Company Act”) and will conduct its business in a manner designed to allow it to
not become subject to the Investment Company Act.

3.10. No Material Actions or Proceedings. Except for the Chapter 11 Cases, and
other than as set forth in the Solicitation Package or the Plan Supplement,
there are no legal or governmental actions, suits or proceedings pending or
threatened (i) against or affecting the Company or any of its Subsidiaries,
(ii) which has as the subject thereof property owned or leased by, the Company
or any of its Subsidiaries or (iii) relating to environmental or discrimination
matters, where in any case (A) there is a reasonable possibility that such
action, suit or proceeding might be determined adversely to the Company or such
Subsidiary and (B) any such action, suit or proceeding, if so determined
adversely, would reasonably be expected to have a Material Adverse Effect or
adversely affect the consummation of the transactions contemplated by this
Agreement.

3.11. Governmental Authorization; Third Party Consents. Except for customary
securities filings in connection with private placements, and filings and
approvals in connection with the Chapter 11 Cases and the Plan, no consent,
approval, authorization of, action by, notice to, or filing with any
Governmental Authority or any other person, and no lapse of a waiting period, is
necessary or required in connection with the execution, delivery or performance
by the Company of this Agreement, the Registration Rights Agreement or the
transactions contemplated hereby, including the issuance and sale of shares of
Stock; provided, however, that the Offered Shares may be subject to restrictions
on transfer under state or federal securities laws as set forth herein or as
otherwise required by such laws at the time a transfer is proposed.

 

  4. REPRESENTATIONS AND WARRANTIES OF THE SUBSCRIBER.

Subscriber hereby represents and warrants to the Company as of the date of
mutual execution of this Agreement:

4.1. Requisite Power and Authority. All actions, corporate or otherwise, on the
part of the Subscriber necessary for the authorization of this Agreement, the
performance of all obligations of the Subscriber hereunder, and the purchase of
the Stock pursuant hereto have been taken or will be taken prior to Closing.
Assuming the due authorization, execution and delivery hereof by the Company,
this Agreement has been duly and validly executed and delivered by the
Subscriber and, assuming the due authorization, execution and delivery thereof
by the Company, will be valid and binding obligations of the Subscriber,
enforceable in accordance with its terms, except as limited by (a) applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors’ rights, and (b) general
principles of equity that restrict the availability of equitable remedies.

4.2. Investment Representations. The Subscriber understands that none of the
Stock has been registered under the Securities Act. The Subscriber also
understands that the Committed Shares and other Stock are being offered and sold
pursuant to an

 

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exemption from registration contained in the Securities Act based in part upon
Subscriber’s representations contained in this Agreement. Subscriber hereby
represents and warrants as follows:

(a) Subscriber Bears Economic Risk. Subscriber has substantial experience in
evaluating and investing in private placement transactions of securities in
companies similar to the Company so that it is capable of evaluating the merits
and risks of its investment in the Company and has the capacity to protect its
own interests. The Subscriber understands that it may be required to bear the
economic risk of this investment indefinitely and may not transfer the Stock
unless the Stock is registered pursuant to the Securities Act, or an exemption
from registration is available. Subscriber also understands that there is no
assurance that any exemption from registration under the Securities Act will be
available and that, even if available, such exemption may not allow Subscriber
to transfer all or any portion of the Committed Shares under the circumstances,
in the amounts or at the times Subscriber might propose. The certificates
representing the Stock will bear appropriate legends reflecting such limitations
on transfer.

(b) Acquisition for Own Account. Subscriber is acquiring the Stock for
Subscriber’s own account for investment only, and not with a view towards
distribution.

(c) Accredited Investor. Subscriber represents that it is an accredited investor
within the meaning of Regulation D under the Securities Act.

(d) Residence. The office of Subscriber in which its investment decision was
made is located at the address indicated for Subscriber on Subscriber’s
signature page hereto.

(e) Company Information. Subscriber has received a copy of the Solicitation
Package and the Plan Supplement.

 

  5. CONDITIONS TO CLOSING.

5.1. Conditions to Obligations of the Subscriber at Closing. The Subscriber’s
obligation to purchase the Committed Shares is subject to the satisfaction, at
or prior to Closing, of the following conditions.

(a) Representations and Warranties True; Performance of Obligations. The
representations and warranties made by the Company in Section 3 hereof shall be
true and correct in all material respects (except for representations and
warranties qualified by materiality or material adverse effect, which shall be
true and correct) at the date of Closing (other than representations and
warranties made as of a specific date, which shall have been true and correct as
of such date), and the Company shall have performed all obligations and
conditions herein required to be performed or observed by it, and the Company
shall have delivered to Rights Offering Agent a certificate executed by a senior
executive officer of the Company on its behalf to the foregoing effect.

 

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(b) Filing of Restated Charter. The Restated Charter shall have been filed with
the Secretary of State of the State of Delaware, shall have become effective and
shall continue to be in full force and effect.

(c) Stock Certificates. The Company shall have delivered to Subscriber validly
executed share certificates representing the Committed Shares to be issued at
Closing.

(d) Registration Rights. The Company shall have entered into and delivered the
Registration Rights Agreement.

(e) Material Adverse Effect. No event or occurrence, individually or in the
aggregate, shall have occurred which has resulted in a Material Adverse Effect.

5.2. Conditions to Obligations of the Company at Closing. The Company’s
obligation to issue and sell the Offered Shares is subject to the satisfaction,
on or prior to Closing, of the following conditions:

(a) Representations and Warranties True. The representations and warranties in
Section 4 made by Subscriber shall be true and correct in all material respects
(except for representations and warranties qualified by materiality or material
adverse effect, which shall be true and correct) at the date of Closing (other
than representations and warranties made as of a specific date, which shall have
been true and correct as of such date).

(b) Performance of Obligations. Subscriber shall have performed and complied
with all agreements and conditions herein required to be performed or complied
with by Subscriber on or before Closing.

(c) Payment. Prior to or on the Bid Remittance Deadline (as defined in the
Subscription Form) Subscriber shall have paid the entire purchase price for its
Committed Shares as set forth on the Bid Report Sheet.

5.3. Conditions to Obligations of the Company and of the Subscriber at Closing.
The Company’s obligation to issue and sell the Committed Shares, and
Subscriber’s obligation to purchase the Committed Shares to which it is
entitled, are subject to the satisfaction, on or prior to Closing, of the
following conditions:

(a) Closing of Other Subscription Transactions. Simultaneously with the Closing
hereunder, the Company shall have received gross proceeds from the sale of Class
C Shares and Convertible Preferred Shares totaling $60 million (which amount
shall be calculated assuming that Subscriber has funded the purchase of the
Committed Shares hereunder and shall include any proceeds received pursuant to
the Backstop Commitment Letter).

(b) Closing of Other Capital Restructuring Transactions. The Capital
Restructuring transactions (other than the closing of the transactions
contemplated by this Agreement) shall have been consummated substantially
simultaneously with the Closing.

 

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(c) Amendment of Senior Secured Loan Agreement. In connection with the Capital
Restructuring, CA Lyon and the Prepetition Agent shall have entered into an
amendment to the Prepetition Secured Loan Agreement in accordance with the terms
set forth in the Colony Restructuring Term Sheet.

(d) Circle G Loan Agreement and Mountain Falls Loan Agreement. In connection
with the Capital Restructuring, the treatment of the Circle G Loan Agreement,
and the treatment of the Mountain Falls Loan Agreement, shall be reasonably
acceptable to CA Lyon and the Ad Hoc Noteholders Group.

(e) Class B Common Stock Purchase Price. In connection with the Capital
Restructuring, the Company shall have received the Class B Common Stock Purchase
Price for the issuance and sale of the Class B Common Shares and the Warrants.

(f) Plan Confirmation. The Plan shall have been confirmed by the Bankruptcy
Court within 60 days after the Petition Date (the “Confirmation Deadline”),
unless the Confirmation Deadline is extended as contemplated by the Solicitation
Package.

(g) No Legal Impediment. No Governmental Authority shall have enacted, issued,
promulgated, enforced or entered any order, writ, judgment, injunction, decree,
stipulation, determination or award that has the effect of making the
transactions contemplated by this Agreement or the Capital Restructuring
illegal, otherwise restraining or prohibiting consummation of such transactions
or causing any of the transactions contemplated hereunder to be rescinded
following completion thereof.

 

  6. COVENANTS.

6.1. Reasonable Assurances. Each of the Company and the Subscriber will use all
commercially reasonable efforts to cause the conditions set forth in Section 5
to be satisfied, insofar as such matters are within the control of the Company
or the Subscriber, as applicable.

 

  7. MISCELLANEOUS.

7.1. Governing Law. This Agreement shall be governed in all respects by the laws
of the State of Delaware as such laws are applied to agreements between Delaware
residents entered into and performed entirely in Delaware.

7.2. Survival. The representations, warranties, covenants and agreements made
herein shall survive for a period of eighteen months following the Closing of
the transactions contemplated hereby, except that the representations and
warranties contained in Sections 3.1, 3.2 and 3.3 shall survive for a period of
three years.

 

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7.3. Successors and Assigns. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable by either the Company or the Subscriber without the prior written
consent of the other party.

7.4. Entire Agreement; Backstop Commitment Letter Not Superseded. This
Agreement, the exhibits and schedules hereto, and the other documents delivered
pursuant hereto constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereof, and no party shall be
liable or bound to any other in any manner by any representations, warranties,
covenants and agreements, except as specifically set forth herein and therein.
Notwithstanding the foregoing, with respect to any Subscriber which is a
Backstop Party (as defined in the Backstop Commitment Letter): this Agreement
does not supersede or restate the Backstop Commitment Letter, which remains in
full force and effect, nor does this Agreement in any way alter or affect the
agreements and obligations of the parties to the Backstop Commitment Letter on
the terms and conditions set forth therein, and (ii) each condition to the
Backstop Commitment Letter is incorporated herein as a condition to the
obligation of such Backstop Party (but not as a condition to the performance of
any Subscriber that is not a Backstop Party) to consummate the transactions
contemplated hereby.

7.5. Severability. In case any provision of this Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.

7.6. Amendment. This Agreement may be amended or modified only upon the written
consent of the Company and the Subscriber.

7.7. Termination. This Agreement may be terminated by the applicable party if
the conditions to such party’s performance in Section 5 are not satisfied or
waived prior to or on the “Outside Date” as defined in the Restructuring Support
Agreement dated as of November 4, 2011, by and among (i) the Company and its
wholly-owned subsidiary, William Lyon Homes, Inc., a California corporation on
behalf of themselves and certain subsidiaries and (ii) the “Consenting
Noteholders” (as defined therein). However, no such termination shall limit any
party’s rights with respect to any breach hereof that occurred prior to such
termination, including enforcement of such party’s rights hereunder with respect
to any events, actions or statements that occurred prior to such termination.

7.8. Remedies. The parties hereto understand and agree that money damages would
not be a sufficient remedy for any violation of this Agreement. Accordingly,
each party agrees that in the event of a breach of this Agreement, the
non-breaching party shall be entitled to seek equitable relief, including
injunction and specific performance. Such remedy shall be in addition to all
other remedies available at law or in equity.

7.9. Delays or Omissions. It is agreed that no delay or omission to exercise any
right, power or remedy accruing to any party, upon any breach, default or
noncompliance by another party under this Agreement shall impair any such right,
power or remedy, nor shall it be construed to be a waiver of any such breach,
default or noncompliance, or any acquiescence therein, or of or in any similar
breach, default or

 

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noncompliance thereafter occurring. All remedies, either under this Agreement,
the Restated Charter, by law, or otherwise afforded to any party, shall be
cumulative and not exclusive.

7.10. Notices. All notices required or permitted hereunder shall be in writing
and shall be deemed effectively given: (a) upon personal delivery to the party
to be notified, (b) when sent by confirmed telex or facsimile if sent during
normal business hours of the recipient, and if not, then on the next business
day, (c) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (d) one (1) day after deposit with
a nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the Company
at the address as set forth on the signature page hereof and to the Subscriber
at the address set forth on the signature page hereof, or at such other address
as the Company or the Subscriber may designate by ten (10) days advance written
notice to the other party hereto.

7.11. Titles and Subtitles. The titles of the sections and subsections of this
Agreement are for convenience of reference only and are not to be considered in
construing this Agreement.

7.12. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which, together,
shall constitute one instrument.

7.13. Broker’s Fees. Each party hereto represents and warrants that, except as
set forth in the Solicitation Package and Plan Supplement, no agent, broker,
investment banker, person or firm acting on behalf, or under the authority, of
such party hereto is or will be entitled to any broker’s or finder’s fee or any
other commission directly or indirectly in connection with the transactions
contemplated herein. Each party hereto further agrees to indemnify the other
party for any claims, losses or expenses incurred by such other party as a
result of the representation in this Section 7.13 being untrue.

7.14. Pronouns. All pronouns contained herein, and any variations thereof, shall
be deemed to refer to the masculine, feminine or neutral, singular or plural, as
the identity of the parties hereto may require.

7.15. Taxes. For federal and state income tax purposes, the parties hereto agree
to report the transactions contemplated hereby consistently with the
characterization of such transactions as described in this Agreement.

7.16. No Presumption. Any rule of law and any legal decision that would require
interpretation of any claimed ambiguities in this Agreement against the party
that drafted it has no application and is expressly waived. If any claim is made
by a party relating to any conflict, omission or ambiguity in the provisions of
this Agreement, no presumption or burden of proof or persuasion will be implied
because this Agreement was prepared by, or at the request of, any party or its
counsel.

 

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7.17. Nature of Subscribers’ Obligations and Rights. The obligations of the
Subscriber under this Agreement are several and not joint with respect to the
obligations of any other subscriber in the Rights Offering, and no Subscriber
shall be responsible in any way for the performance of the obligations of any
other subscriber under any other similar agreement or with respect to any
Offered Shares. Nothing contained herein, and no action taken by any Subscriber
pursuant hereto or thereto, shall be deemed to constitute the Subscribers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Subscribers are in any way acting in concert or as
a group with respect to such obligations or the transactions contemplated by
this Agreement or any other similar agreement.

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the Company has executed this CONVERTIBLE PREFERRED STOCK
AND CLASS C COMMON STOCK SUBSCRIPTION AGREEMENT as of the date set forth in the
first paragraph hereof.

 

COMPANY: WILLIAM LYON HOMES Signature:  

 

Name:  

 

Title:  

 

Address:  

 

 

 

[COMPANY SIGNATURE PAGE TO CONVERTIBLE PREFERRED STOCK AND CLASS C COMMON STOCK
SUBSCRIPTION AGREEMENT]

 

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IN WITNESS WHEREOF, the undersigning Subscriber has executed this CONVERTIBLE
PREFERRED STOCK AND CLASS C COMMON STOCK SUBSCRIPTION AGREEMENT.

 

SUBSCRIBER (in an individual):    SUBSCRIBER (if an entity):   
[                    ] Signature:    Signature: Name:    Name:    Title:
Address:    Address:

 

State/Country of Domicile or Formation:   

 

[SUBSCRIBER SIGNATURE PAGE TO CONVERTIBLE PREFERRED STOCK AND CLASS C COMMON
STOCK SUBSCRIPTION AGREEMENT]

 

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EXHIBIT A

CONVERTIBLE PREFERRED STOCK AND

CLASS C COMMON STOCK REGISTRATION RIGHTS AGREEMENT

 

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