Agreement for Seventh Modification of Deeds of Trust and other Loan Instruments



 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; 

  

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	 	(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; 
  

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 (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; 
  

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 (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; 
  

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 (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. 
  

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 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. 
  

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	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

  

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 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%

  

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	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,

  

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	 	    	 	 	 	    	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.

  

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 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. 

  

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 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


  

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