Exhibit 10.1

 

William Lyon Homes, Inc.

Loan No. 906-0100

 

AGREEMENT FOR SEVENTH MODIFICATION OF DEEDS OF TRUST AND OTHER LOAN INSTRUMENTS

 

This Agreement for Seventh Modification of Deeds of Trust and Other Loan
Instruments (this “Seventh Modification”) is made as of October 6, 2004 by and
between WILLIAM LYON HOMES, INC., a California corporation (“Borrower”) and
GUARANTY BANK, a federal savings bank organized and existing under the laws of
the United States (formerly known as “Guaranty Federal Bank, F.S.B.”)
(“Lender”), with reference to the following facts:

 

A. Borrower and Lender entered into a Master Loan Agreement (the “Loan
Agreement”) dated August 31, 2000, which provides for a loan of FIFTY-FIVE
MILLION DOLLARS ($55,000,000.00) (the “Original Loan Amount”) to Borrower on the
terms and conditions specified therein. The Loan is evidenced and secured by a
revolving promissory note and other loan instruments (collectively, the “Loan
Instruments”). The Loan Instruments, each executed by Lender and Borrower, were
modified by:

 

  (i) that certain Agreement for First Modification of Deeds of Trust and Other
Loan Instruments dated June 8, 2001 (“First Modification”);

 

  (ii) that certain Agreement For Second Modification of Deeds of Trust and
Other Loan Instruments dated July 23, 2001 (“Second Modification”);

 

  (iii) that certain Agreement for Third Modification of Deeds of Trust and
Other Loan Instruments dated December 19, 2001, (“Third Modification”);

 

  (iv) that certain Agreement for Fourth Modification of Deeds of Trust and
Other Loan Instruments dated May 29, 2002 (“Fourth Modification”);

 

  (v) that certain Agreement for Fifth Modification of Deeds of Trust and Other
Loan Instruments dated June 6, 2003 (“Fifth Modification”); and

 

  (vi) that certain Agreement for Sixth Modification of Deeds of Trust and Other
Loan Instruments dated November 14, 2003 (“Sixth Modification”).

 

Pursuant to the terms and provisions of the First Modification, the Original
Loan Amount was increased, as evidenced by a certain Amended and Restated
Revolving Promissory Note executed by Borrower for the benefit of lender and
dated June 8, 2001 to the maximum principal amount of SIXTY-FIVE MILLION DOLLARS
($65,000,000.00). Pursuant to the terms and provisions of the Fourth
Modification, the Loan was increased, as evidenced by a certain Amended and
Restated Revolving Promissory Note executed by Borrower for the benefit of
Lender and dated May 29, 2002 to the maximum principal amount of SEVENTY-FIVE
MILLION DOLLARS ($75,000,000.00). Pursuant to the terms and provisions of the
Sixth Modification, the Loan was increased, as evidenced by a certain Third
Amended and Restated Revolving Promissory Note executed by Borrower for the
benefit of Lender and dated November 14, 2003 to the maximum principal amount of
ONE HUNDRED TWENTY-FIVE MILLION DOLLARS ($125,000,000.00) (the “Loan”). Upon
full execution, this Seventh Modification shall constitute one of the Loan
Instruments. All defined terms used in this Seventh Modification shall have the
meanings ascribed to them in the Loan Agreement unless the context requires
otherwise.

 

B. At Borrower’s request, Lender has agreed to modify one or more of the Loan
Instruments, as herein provided.

 

NOW, THEREFORE, in consideration of the premises and mutual agreements herein,
the parties hereby agree as follows:

 

1. Modifications. The Loan Instruments specified in Exhibit “A” attached hereto
and incorporated herein by this reference are modified as set forth therein,
effective upon timely satisfaction of the conditions set forth in Section 2
below. As used in this Seventh Modification and the attached Exhibit “A,” the
term “Deeds of Trust” refers to the Construction Deeds of Trust (With Security
Agreement, Fixture Filing and Assignment of Rents and Leases) (“Deed of Trust”),
each executed by Borrower for the benefit of Lender:

 

as modified by the First Modification and evidenced by the Memorandums of First
Modification of Deeds of Trust and Other Loan Instruments dated June 8, 2001 and
recorded in the Official Records of:

 

  (a) Orange County, California on July 20, 2001, as Instrument No.
2001-0492777;

 

1

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

  (b) San Diego County, California on July 20, 2001, as Instrument No.
2001-0505154;

 

  (c) San Joaquin County, California on July 24, 2001, as Instrument No.
2001-01116593;

 

  (d) Riverside County, California on August 6, 2001 as Instrument No. 368935;

 

  (e) San Bernardino County, California on October 16, 2001 as Instrument No.
2001-0470256; and

 

  (f) Maricopa County, California on July 20, 2001, as Instrument No.
2001-0652927;

 

as modified by the Second Modification and evidenced by the Memorandums of
Second Modification of Deeds of Trust and Other Loan Instruments dated July 23,
2001 and recorded in the Official Records of:

 

  (g) Orange County, California on August 31, 2001, as Instrument No.
2001-0614957;

 

  (h) San Diego County, California on August 31, 2001, as Instrument No.
2001-0626061;

 

  (i) San Joaquin County, California on August 31, 2001, as Instrument No.
2001-01144060;

 

  (j) Riverside County, California on August 31, 2001 as Instrument No. 426142;

 

  (k) San Bernardino County, California on August 31, 2001 as Instrument No.
2001-401382; and

 

  (l) Maricopa County, California on August 31, 2001, as Instrument No.
2001-0810003;

 

as modified by the Third Modification dated December 19, 2001;

 

as modified by the Fourth Modification and evidenced by the Memorandums of
Fourth Modification of Deeds of Trust and Other Loan Instruments dated May 29,
2002 and recorded in the Official Records of:

 

  (m) Orange County, California on June 19, 2002, as Instrument No.
2002-0512402;

 

  (n) San Diego County, California on June 9, 2002, as Instrument No.
2002-0516959;

 

  (o) San Joaquin County, California on June 19, 2002 as Instrument No.
2002-104493;

 

  (p) Maricopa County, Arizona on June 19, 2002 as Instrument No. 2002-0622784;

 

  (q) Stanislaus County, California on June 19, 2002 as Instrument No.
2002-0078803; and

 

  (r) Clark County, Nevada on June 19, 2002 as Instrument No. 00696 – Book
L0020619;

 

(1) (1084) a certain Deed of Trust dated October 16, 2002 and recorded in the
Official Records of Contra Costa County, California on October 29, 2002 as
Series No. 2002-0395911-00;

 

(2) (2151) a certain Deed of Trust dated November 22, 2002 and recorded in the
Official Records of Santa Clara County, California on January 17, 2003 as
Instrument No. 2003-16756674;

 

(3) (2156) a certain Deed of Trust dated December 6, 2002 and recorded in the
Official Records of San Diego County, California on December 13, 2002 as
Instrument No. 2002-1136706;

 

2

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

(4) (1089 & 1090) a certain Deed of Trust dated January 3, 2003 and recorded in
the Official Records of Contra Costa County, California on January 7, 2003 as
Series No. 2003-0008162-00;

 

(5) (2162) a certain Deed of Trust dated January 9, 2003 and recorded in the
Official Records of Maricopa County, Arizona on January 15, 2003 as Instrument
No. 2003-0052171;

 

(6) (1099 & 1100) a certain Deed of Trust dated May 23, 2003 and recorded in the
Official Records of Maricopa County, Arizona on May 30, 2003 as Instrument No.
2003-0690830;

 

each as modified by the Fifth Modification and evidenced by the Memorandums of
Fifth Modification of Deeds of Trust and Other Loan Instruments dated June 6,
2003 and recorded in the Official Records of:

 

  (s) Orange County, California on June 13, 2003, as Instrument No.
2003-000696239;

 

  (t) San Diego County, California on June 13, 2003, as Instrument No.
2003-0701777;

 

  (u) San Joaquin County, California on June 17, 2003 as Instrument No.
2003-131447;

 

  (v) Maricopa County, Arizona on June 13, 2003 as Instrument No. 2003-0769110;

 

  (w) Stanislaus County, California on June 17, 2003 as Instrument No.
2003-009720100; and

 

  (x) Clark County, Nevada on June 13, 2003 as Instrument No. 2003-0613-02716;

 

  (y) Riverside County, California on June 13, 2003 as Instrument No.
2003-438782;

 

  (z) Santa Clara County, California on June 16, 2003 as Serial No. 17110264;
and

 

  (aa) Contra Costa County, California on June 16, 2003 as Instrument No.
280094;

 

(7) (1105) a certain Deed of Trust dated June 3, 2003 and recorded in the
Official Records of Contra Costa County, California on June 13, 2003 as Series
No. 2003-278107;

 

(8) (1103) a certain Deed of Trust dated June 13, 2003 and recorded in the
Official Records of Orange County, California on July 11, 2003 as Instrument No.
2003-000819535;

 

(9) (1101 & 1102) a certain Deed of Trust dated June 13, 2003 and recorded in
the Official Records of Clark County, Nevada on July 7, 2003 as Instrument No.
20030707-01318;

 

(10) (1108 & 1109) a certain Deed of Trust dated June 17, 2003 and recorded in
the Official Records of Maricopa County, Arizona on June 30, 2003 as Instrument
No. 2003-0852310;

 

(11) (1106) a certain Deed of Trust dated June 18, 2003 and recorded in the
Official Records of Orange County, California on July 2, 2003 as Instrument No.
2003-000779063;

 

(12) (1107) a certain Deed of Trust dated June 18, 2003 and recorded in the
Official Records of Orange County, California on July 2, 2003 as Instrument No.
2003-000781409;

 

(13) (1110 & 1111) a certain Deed of Trust dated July 21, 2003 and recorded in
the Official Records of Maricopa County, Arizona on July 31, 2003 and August 16,
2003 as Instrument No. 2003-1025805;

 

(14) (2193) a certain Deed of Trust dated July 31, 2003 and recorded in the
Official Records of San Joaquin County, California on August 12, 2003 as
Instrument No. 2003-181847;

 

(15) (2194) a certain Deed of Trust dated August 6, 2003 and recorded in the
Official Records of Santa Clara County on August 15, 2003 as Instrument No.
2003-1727295;

 

(16) (1112 & 1113) a certain Deed of Trust dated August 25, 2003 and recorded in
the Official Records of Maricopa County, Arizona on August 29, 2003 as
Instrument No. 2003-1212634;

 

3

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

(17) (2198) a certain Deed of Trust dated September 3, 2003 and recorded in the
Official Records of Riverside County, California on September 16, 2003 as
Document No. 2003-718387;

 

(18) (2195) a certain Deed of Trust dated September 3, 2003 and recorded in the
Official Records of Santa Clara County, California on September 15, 2003 as
Instrument No. 2003-17345667;

 

(19) (2199) a certain Deed of Trust dated September 9, 2003 and recorded in the
Official Records of Maricopa County, Arizona on September 16, 2003 as Instrument
No. 2003-1297882;

 

(20) (1114 & 1115) a certain Deed of Trust dated September 22, 2003 and recorded
in the Official Records of Maricopa County, Arizona on September 30, 2003 as
Instrument No. 2003-1371575;

 

(21) (2204) a certain Deed of Trust dated October 7, 2003 and recorded in the
Official Records of Riverside County, California on October 16, 2003 as Document
No. 2003-815553;

 

(22) (1117) a certain Deed of Trust dated October 7, 2003 and recorded in the
Official Records of Orange County, California on October 23, 2003 as Instrument
No. 2003-001308789;

 

(23) (1119 & 1120) a certain Deed of Trust dated October 21, 2003 and recorded
in the Official Records of Maricopa County, Arizona on October 31, 2003 as
Instrument No. 2003-1518590; and

 

(24) (2206) a certain Deed of Trust dated November 12, 2003 and recorded in the
Official Records of Riverside County, California on November 14, 2003 as
Document No. 2003-901911.

 

each as modified by the Sixth Modification and evidenced by the Memorandums of
Sixth Modification of Deeds of Trust and Other Loan Instruments dated November
14, 2003 and recorded in the Official Records of:

 

  (bb) Orange County, California on December 23, 2003, as Instrument No.
2003-001511002;

 

  (cc) San Diego County, California on December 23, 2003, as Instrument No.
2003-1502130;

 

  (dd) Riverside County, California on December 23, 2003 as Document No.
2003-998474;

 

  (ee) Santa Clara County, California on December 24, 2003 as Instrument No.
17545737; and

 

  (ff) Contra Costa County, California on December 24, 2003 as Instrument No.
2003-615272.

 

  (gg) Maricopa County, Arizona on December 29, 2003 as Instrument No.
2003-1739422;

 

  (hh) Clark County, Nevada on December 30, 2003 as Instrument No.
2003-1230-01204

 

  (ii) San Joaquin County, California on January 9, 2004 as Instrument No.
2004-003909;

 

(25) (2202) a certain Deed of Trust dated October 7, 2003 and recorded in the
Official Records of Orange County, California on December 2, 2003, 2003 as
Instrument No. 2003-001438662;

 

(26) (1121 & 1122) a certain Deed of Trust dated November 21, 2003 and recorded
in the Official Records of Maricopa County, Arizona on December 1, 2003 as
Instrument No. 2003-1640822;

 

(27) (1125 & 1126) a certain Deed of Trust dated December 17, 2003 and recorded
in the Official Records of Maricopa County, Arizona on December 30, 2003 as
Instrument No. 2003-1745174;

 

(28) (1127) a certain Deed of Trust dated February 6, 2004 and recorded in the
Official Records of Santa Clara County, California on February 13, 2004 as
Instrument No. 17615443;

 

4

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

(29) (2211) a certain Deed of Trust dated January 6, 2004 and recorded in the
Official Records of Santa Clara County, California on January 15, 2004 as
Instrument No. 17573614;

 

(30) (2212) a certain Deed of Trust dated January 7, 2004 and recorded in the
Official Records of Riverside County, California on January 15, 2004 as Document
No. 2004-0030695;

 

(31) (2213) a certain Deed of Trust dated January 26, 2004 and recorded in the
Official Records of Maricopa County, Arizona on March 9, 2004 as Instrument No.
2004-0241585;

 

(32) (1130 & 1131) a certain Deed of Trust dated January 16, 2004 and recorded
in the Official Records of Maricopa County, Arizona on January 30, 2004 as
Instrument No. 2004-0098299;

 

(33) (1132) a certain Deed of Trust dated February 9, 2004 and recorded in the
Official Records of Clark County, Nevada on February 27, 2004 as Instrument No.
2004-2227-04201;

 

(34) (2216) a certain Deed of Trust dated February 2, 2004 and recorded in the
Official Records of Maricopa County, Arizona on May 26, 2004 as Instrument No.
2004-0586206;

 

(35) (2214) a certain Deed of Trust dated February 5, 2004 and recorded in the
Official Records of Riverside County, California on February 13, 2004 as
Document No. 2004-0105884;

 

(36) (1134) a certain Deed of Trust dated February 6, 2004 and recorded in the
Official Records of Orange County, California on February 13, 2004 as Instrument
No. 2004-000111468;

 

(37) (2215) a certain Deed of Trust dated February 9, 2004 and recorded in the
Official Records of Santa Clara County, California on February 18, 2004 as
Instrument No. 04-17619000;

 

(38) (2222) a certain Deed of Trust dated January 30, 2004 and recorded in the
Official Records of Orange County, California on February 24, 2004 as Instrument
No. 2004-000139754;

 

(39) (1135 & 1136) a certain Deed of Trust dated February 19, 2004 and recorded
in the Official Records of Maricopa County, Arizona on February 27, 2004 as
Instrument No. 2004-02001556;

 

(40) (1133 & 1138) a certain Deed of Trust dated February 6, 2004 and recorded
in the Official Records of Contra Costa County, California on March 19, 2004 as
Series No. 92735;

 

(41) (2229) a certain Deed of Trust dated March 5, 2004 and recorded in the
Official Records of Riverside County, California on March 15, 2004 as Document
No. 2004-0178360;

 

(42) (1137) a certain Deed of Trust dated March 25, 2004 and recorded in the
Official Records of Orange County, California on April 9, 2004 as Instrument No.
2004-000297893;

 

(43) (1141) a certain Deed of Trust dated April 1, 2004 and recorded in the
Official Records of San Joaquin County, California on April 14, 2004 as
Instrument No. 2004-078081;

 

(44) (1139 & 1140) a certain Deed of Trust dated March 18, 2004 and recorded in
the Official Records of Maricopa County, Arizona on March 31, 2004 as Instrument
No. 2004-0337365;

 

(45) (1144 & 1145) a certain Deed of Trust dated April 19, 2004 and recorded in
the Official Records of Maricopa County, Arizona on April 30, 2004 as Instrument
No. 2004-0479520;

 

(46) (2230) a certain Deed of Trust dated April 22, 2004 and recorded in the
Official Records of Santa Clara County, California on May 17, 2004 as Instrument
No. 17790354;

 

(47) (1147 & 1148) a certain Deed of Trust dated May 7, 2004 and recorded in the
Official Records of Maricopa County, Arizona on May 14, 2004 as Instrument No.
2004-0539765;

 

(48) (1149 & 1150) a certain Deed of Trust dated May 17, 2004 and recorded in
the Official Records of Maricopa County, Arizona on June 1, 2004 as Instrument
No. 2004-0616422;

 

(49) (1151) a certain Deed of Trust dated June 21, 2004 and recorded in the
Official Records of Orange County, California on July 1, 2004 as Instrument No.
2004-000603410;

 

(50) (1153 & 1154) a certain Deed of Trust dated June 18, 2004 and recorded in
the Official Records of Maricopa County, Arizona on June 30, 2004 as Instrument
No. 2004-0754818.

 

5

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

2. Conditions. The modifications of Section 1 above shall take effect only upon
Borrower’s satisfaction, at its expense, of all of the following conditions not
later than the date of this Seventh Modification:

 

(a) if required by Lender, delivery to Lender of one or more endorsements to the
Title Policy (whether one or more) insuring the lien of the Deeds of Trust as
may be required by Lender, all in form and of content acceptable to Lender,
insuring that, except as set forth in this Seventh Modification, the priority of
such lien is unaffected by the modifications set forth herein and that the Title
Policy insuring the Deeds of Trust remains in full force and effect in the full
amount of the Loan;

 

(b) if required by Lender, delivery to Lender of one or more duly executed
recordable memorandums of this Seventh Modification (collectively, the “Seventh
Memorandum”);

 

(c) satisfaction of such other conditions as may be set forth on Exhibit “B”
attached hereto and incorporated herein by this reference, if any; and

 

(d) if the Loan has been guarantied (or indemnities given) or if there are
junior liens encumbering the property which is encumbered by the Deeds of Trust,
delivery to Lender of duly executed consents to the modifications set forth in
this Seventh Modification by the guarantor(s) and/or junior lienors, as
applicable, as may be set forth in Exhibit “C” attached hereto or as may be
attached to the Seventh Memorandum, each incorporated herein by this reference.

 

3. Representations and Warranties. Borrower hereby represents and warrants that
no default, event of default, breach or failure of condition has occurred, or
would exist with notice or the lapse of time or both, under any of the Loan
Instruments; and all representations and warranties herein and in the other Loan
Instruments are true and correct, which representations and warranties shall
survive execution of this Seventh Modification. All parties who execute this
Seventh Modification and any other documents required hereunder on behalf of
Borrower represent and warrant that they have full power and authority to
execute and deliver such documents, and that all such documents are enforceable
in accordance with their terms. As of the date of this Seventh Modification,
Borrower hereby acknowledges and agrees that it has no defenses, offsets or
claims against Lender or the enforcement of the Loan Instruments and that Lender
has not waived any of its rights or remedies under any such documents.

 

4. No Impairment. Except as expressly provided herein, nothing in this Seventh
Modification shall alter or affect any provision, condition or covenant
contained in the Loan Instruments or affect or impair any of Lender’s rights,
powers or remedies thereunder. It is the intent of the parties hereto that the
provisions of the Loan Instruments shall continue in full force and effect
except as expressly modified hereby.

 

5. Miscellaneous. This Seventh Modification and the other Loan Instruments shall
be governed by and interpreted in accordance with the laws of the State of
California, except as they may be preempted by federal law. In any action
brought or arising out of this Seventh Modification or the Loan Instruments,
Borrower, and, if applicable, the general partners, members and joint venturers
of Borrower, hereby consent to the jurisdiction of any federal or state court
having proper venue within the State of California and also consent to the
service of process by any means authorized by California or federal law. The
headings used in this Seventh Modification are for convenience only and shall be
disregarded in interpreting the substantive provisions of this Seventh
Modification. Time is of the essence of each term of the Loan Instruments,
including this Seventh Modification. If any provision of this Seventh
Modification or any of the other Loan Instruments shall be determined by a court
of competent jurisdiction to be invalid, illegal or unenforceable, that portion
shall be deemed severed therefrom and the remaining parts shall remain in full
force as though the invalid, illegal, or unenforceable portion had never been a
part thereof. This Seventh Modification may be executed in one or more
counterparts, all of which, taken together, shall constitute one and the same
Seventh Modification.

 

6. Integration; Interpretation. The Loan Instruments, including this Seventh
Modification, contain or expressly incorporate by reference the entire agreement
of the parties with respect to the matters contemplated herein and supersede all
prior negotiations. The Loan Instruments shall not be modified except by written
instrument executed by all parties. Any reference to the Loan Instruments in any
of the Loan Instruments includes this Seventh Modification and any amendments,
renewals or extensions approved by Lender hereunder.

 

IN WITNESS WHEREOF, this Agreement for Seventh Modification of Deeds of Trust
and Other Loan Instruments is executed as of the date first hereinabove written.

 

6

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

LENDER:   GUARANTY BANK,    

a federal savings bank organized and existing

under the laws of the United States

    By:  

/s/ Kent Newberry

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

    Name:   Kent Newberry     Title:   Vice President BORROWER:   WILLIAM LYON
HOMES, INC.,     a California corporation     By:  

/s/ Michael D. Grubbs

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

    Name:   Michael D. Grubbs     Title:  

Senior Vice President and

Chief Financial Officer

    By:  

/s/ Richard S. Robinson

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

    Name:   Richard S. Robinson     Title:   Senior Vice President

 

7

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

William Lyon Homes, Inc.

Loan No. 906-0100

 

EXHIBIT “A”

 

AGREEMENT FOR SEVENTH MODIFICATION OF DEEDS OF TRUST AND OTHER LOAN INSTRUMENTS

(Modifications)

 

Loan Instrument Modified        Modification 1.      Third Amended and Restated
                Revolving Promissory Note   (i)    The Facility Expiration Date
recited in the Note is hereby amended to be October 19, 2005.            (ii)   
The following terms defined in the Note are hereby amended and restated as
follows, and all references in the Note to such definitions shall be deemed to
refer to such terms as so amended and restated:                 (A) “Base Rate
Spread”: The percentage rate to be added to the Base Rate to determine the Base
Interest Rate, calculated as follows, and effective on the first (1st) day of
the month following Lender’s receipt of Borrower’s quarterly Financial Statement
pursuant to the Loan Agreement, which receipt shall be not later than fifteen
(15) days prior to an applicable change to the Base Rate Spread, keyed to
Borrower’s then ratio of total liabilities to Tangible Net Worth (however no
such ratio in excess of 3.25 to 1 is permitted under this Note):                

Ratio of Total Liabilities

To Tangible Net Worth

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

 

Base Rate

Spread

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

                3.25 (or less) to 1   0.00%                 (B) “Euro-Dollar
Interest Rate Spread”: The percentage rate calculated as follows, and effective
on the first (1st) day of the month following Lender’s receipt of Borrower’s
quarterly Financial Statement pursuant to the Loan Agreement, which receipt
shall be not later than fifteen (15) days prior to an applicable change to the
Euro-Dollar Interest Rate, keyed to Borrower’s then ratio of total liabilities
to Tangible Net Worth (however no such ratio in excess of 3.25 to 1 is permitted
under this Note):                

Rate of Total Liabilities

To Tangible Net Worth

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

 

Euro-Dollar

Interest Rate

Spread

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

                3.25 – 3.00 to 1   2.35%                 2.99 – 2.50 to 1  
2.25%                 2.49 (or less) to 1   2.15%

 

8

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

2.      Loan Agreement   (i)      Paragraph 19. The foregoing is hereby amended
to delete the existing reference to the Facility Fee and replace the same with
“FOUR HUNDRED THIRTY-SEVEN THOUSAND FIVE HUNDRED DOLLARS ($437,500.00)” (to be
adjusted for amounts previously paid in December 2003, but not earned by
Lender).            (ii)      Paragraph 24. As the Restricted Availability
Amount shall be made available for Disbursement subject to all terms and
provisions of the Loan Agreement, the maximum Loan Allocations and number of
Residences set forth in Subsections (i), (ii) and (iii) of Paragraph 24 shall
apply. The Maximum Loan Allocation for Finished Lots and Lots Being Actively
Developed shall remain $15,000,000.00 per Approved Subdivision.            (iii)
     New Paragraph 25. Paragraph 25 is hereby deleted is its entirety and a new
Paragraph 25 is hereby added:                               “25.      USA
Patriot Act Notice. Lender hereby notifies Borrower that pursuant to the
requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into
law October 26, 2001) (the “Act”), it is required to obtain, verify and record
information that identifies Borrower, which information includes the name and
address of Borrower and other information that will allow Lender to identify
Borrower in accordance with the Act.” 3.      Exhibit “A” to Master Loan
Agreement   (i)      Paragraph 15. Additional Defaults. Paragraph 15 is hereby
amended to add a new subparagraph E to read as follows:                   E. Any
breach or default beyond applicable notice or cure periods under, or with
respect to, any Other Loan (as defined in Paragraph 19 below).            (ii)
     Paragraph 19 – Restrictions on Availability. Paragraph 19 is hereby deleted
in its entirety and amended and restated as follows:                   A. Other
Loans. In the event Lender at any time extends any other loan or loans (“Other
Loan”) to Borrower, total availability under the Loan shall automatically be
reduced by an amount equal to the greater of (i) all amounts outstanding under
such Other Loan at such time of determination, and (ii) the principal amount of
Lender’s commitment to lend with respect to such Other Loan, as the same may be
reduced over the term of such Other Loan,

 

9

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

                  until all such outstanding amounts, and all other obligations,
under and with respect to such Other Loan have been performed and paid in full,
and Lender’s commitment to lend under such Other Loan has been terminated in its
entirety. Any event of default under any Other Loan (subject to applicable
notice and cure periods, if any, thereunder) shall constitute an Event of
Default under the Agreement without benefit of any other notice or cure period
under the Agreement. Borrower shall execute and deliver to Lender such other
instruments, undertakings and agreements, including with respect to title
insurance, as Lender may require in connection with the foregoing. Borrower
shall reimburse Lender for all costs and expenses, including reasonable
attorneys fees and costs, incurred in connection with the foregoing. In no event
shall the aggregate of all Other Loans exceed an amount equal to Twenty Million
Dollars ($20,000,000.00).           

(iii)

     Paragraph 16. Additional Loan Covenants.                   A. Paragraph
16(E). Subsection E is hereby deleted in its entirety.                   B. New
Paragraph 16(L). A new subsection L is hereby added to read in full as follows:
                  L.      Guarantor shall deliver monthly year-to-date sales and
inventory status reports on all projects under development by Guarantor within
thirty (30) days of the end of each month.

 

10

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

William Lyon Homes, Inc.

Loan No. 906-0100

 

EXHIBIT “B”

 

AGREEMENT FOR SEVENTH MODIFICATION OF DEEDS OF TRUST AND OTHER LOAN INSTRUMENTS

(Other Conditions to Modifications)

 

1. Legal Fees. Borrower shall pay all legal fees and costs incurred by Lender in
connection with the preparation and negotiation of this Seventh Modification.

 

2. Title Endorsements/Recording Fees. Borrower shall pay all title charges and
recording fees and costs incurred by Lender in connection with the requirements
of Paragraphs 2(a) and 2(b) of this Seventh Modification.

 

3. Consent of Guarantor(s). Guarantors of the Loan shall execute and deliver the
attached Consent of Guarantor to Lender and the attached Consent to the Seventh
Memorandum hereof described in Paragraph 2(b) of this Seventh Modification
(suitable for recording).

 

4. Consent of Junior Lienholder(s). If indicated on the attached Exhibit “C” or
otherwise required by Lender, Junior Lienholders shall execute and deliver the
attached Consent of Junior Lienholder and the attached Consent to the Seventh
Memorandum hereof described in Paragraph 2(b) of this Seventh Modification
(suitable for recording).

 

5. Fees. Borrower shall pay to Lender the following non-refundable extension
fees as a condition precedent to the effectiveness of this Seventh Modification,
which fees shall not be applicable to payment of principal or interest due under
the Note, or otherwise, and shall be retained by Lender in all events, payable
upon execution of this Seventh Modification as follows:

 

  (i) Facility Fee. FOUR HUNDRED THIRTY-SEVEN THOUSAND FIVE HUNDRED DOLLARS
($437,500.00) for renewal of the Loan, the availability of such Loan as
increased pursuant to this Seventh Modification, subject to a credit in the
amount of SIXTY-TWO THOUSAND FIVE HUNDRED DOLLARS ($62,500.00) remitted to
Lender by Borrower as of the effective date hereof.

 

11

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

William Lyon Homes, Inc.

Loan No. 906-0100

 

EXHIBIT “C”

 

AGREEMENT FOR SEVENTH MODIFICATION OF DEEDS OF TRUST AND OTHER LOAN INSTRUMENTS

(Consents to Modifications)

 

CONSENT OF GUARANTOR

 

The undersigned Guarantor confirms its guaranties of Borrower’s obligations to,
and indemnities in favor of, Lender under the Loan Agreement and the other Loan
Instruments referenced in, and as modified by the foregoing Seventh Modification
and Seventh Memorandum described therein, and consents to and accepts the
foregoing modifications.

 

GUARANTOR:

 

WILLIAM LYON HOMES,

a Delaware corporation

   

By:

 

/s/ Michael D. Grubbs

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

   

Name:

 

Michael D. Grubbs

   

Title:

 

Senior Vice President and

Chief Financial Officer

   

By:

 

/s/ Richard S. Robinson

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

   

Name:

 

Richard S. Robinson

   

Title:

 

Senior Vice President

 

12