Document:

Executive Retention Agreement

 Exhibit 10.3 
  
 BIOSPHERE MEDICAL, INC. 
  
 Executive Retention Agreement 
  
 THIS EXECUTIVE RETENTION AGREEMENT by and between BioSphere Medical, Inc., a Delaware corporation (the “Company”), and Richard J. Faleschini
(the “Executive”) is made effective as of November 2, 2004 (the “Effective Date”). 
  
 WHEREAS, the Company recognizes that, as is the case with many publicly-held corporations, the possibility of a change in control of the Company exists
and that such possibility, and the uncertainty and questions which it may raise among key personnel, may result in the departure or distraction of key personnel to the detriment of the Company and its stockholders, and 
  
 WHEREAS, the Compensation Committee of the Board of Directors of the Company
(the “Board”) has determined that appropriate steps should be taken to reinforce and encourage the continued employment and dedication of the Company’s key personnel without distraction from the possibility of a change in control of
the Company and related events and circumstances. 
  
 NOW,
THEREFORE, as an inducement for and in consideration of the Executive remaining in its employ, the Company agrees that the Executive shall receive the severance benefits set forth in this Agreement in the event the Executive’s employment with
the Company is terminated under the circumstances described below subsequent to a Change in Control (as defined in Section 1.1). 
  
 1. Key Definitions. 
  
 As used herein, the following terms shall have the following respective meanings: 
  
 1.1 “Change in Control” means an event or occurrence set forth in any one or more of subsections (a)
through (d) below (including an event or occurrence that constitutes a Change in Control under one of such subsections but is specifically exempted from another such subsection): 
  
 (a) the acquisition by an individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership of any capital stock of the Company if, after such acquisition, such Person beneficially owns (within the meaning of Rule 13d-3
promulgated under the Exchange Act) 50% or more of either (x) the then-outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (y) the combined voting power of the then-outstanding securities of the
Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change in
Control: (i) any acquisition directly from the Company (excluding an acquisition pursuant to the exercise, conversion or exchange of any security exercisable for, convertible into or exchangeable for common stock or voting securities of the Company,
unless the Person exercising, converting or exchanging such security acquired such security directly from the 

 Company or an underwriter or agent of the Company), (ii) any acquisition by the Company, (iii) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (iv) any acquisition by any corporation pursuant to a transaction which complies with clauses (i) and (ii) of subsection
(c) of this Section 1.1; or 
  
 (b) such time as the Continuing
Directors (as defined below) do not constitute a majority of the Board (or, if applicable, the Board of Directors of a successor corporation to the Company), where the term “Continuing Director” means at any date a member of the Board (i)
who was a member of the Board on the date of the execution of this Agreement or (ii) who was nominated or elected subsequent to such date by at least a majority of the directors who were Continuing Directors at the time of such nomination or
election or whose election to the Board was recommended or endorsed by at least a majority of the directors who were Continuing Directors at the time of such nomination or election; provided, however, that there shall be excluded from
this clause (ii) any individual whose initial assumption of office occurred as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or
consents, by or on behalf of a person other than the Board; or 
  
 (c) the consummation of a merger, consolidation, reorganization, recapitalization or statutory share exchange involving the Company or a sale or other disposition of all or substantially all of the assets of the Company in one or a series
of transactions (a “Business Combination”), unless, immediately following such Business Combination, each of the following two conditions is satisfied: (i) all or substantially all of the individuals and entities who were the beneficial
owners of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the then-outstanding shares of common stock and the
combined voting power of the then-outstanding securities entitled to vote generally in the election of directors, respectively, of the resulting or acquiring corporation in such Business Combination (which shall include, without limitation, a
corporation which as a result of such transaction owns the Company or substantially all of the Company’s assets either directly or through one or more subsidiaries) (such resulting or acquiring corporation is referred to herein as the
“Acquiring Corporation”) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, respectively; and (ii) no
Person (excluding any employee benefit plan (or related trust) maintained or sponsored by the Company or by the Acquiring Corporation) beneficially owns, directly or indirectly, 50% or more of the then outstanding shares of common stock of the
Acquiring Corporation, or of the combined voting power of the then-outstanding securities of such corporation entitled to vote generally in the election of directors (except to the extent that such ownership existed prior to the Business
Combination); provided however, that a Business Combination with any entity specifically proposed by the Employee to members of the Board of Directors on or before the date of this Agreement will not constitute a Change of Control for purposes of
this Agreement unless the Board of Directors, acting in its sole discretion, so determines; or 
  
 (d) approval by the stockholders of the Company of a complete liquidation or dissolution of the Company. 
  

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 1.2 “Change in Control Date” means the first date during the Term (as defined in Section
2) on which a Change in Control occurs. Anything in this Agreement to the contrary notwithstanding, if (a) a Change in Control occurs, (b) the Executive’s employment with the Company is terminated prior to the date on which the Change in
Control occurs, and (c) it is reasonably demonstrated by the Executive that such termination of employment (i) was at the request of a third party who has taken steps reasonably calculated to effect a Change in Control or (ii) otherwise arose in
connection with or in anticipation of a Change in Control, then for all purposes of this Agreement the “Change in Control Date” shall mean the date immediately prior to the date of such termination of employment. 
  
 1.3 “Cause” means: 
  
 (a) the Executive’s willful and continued failure to substantially
perform his reasonable assigned duties (other than any such failure resulting from incapacity due to physical or mental illness), which failure is not cured within 30 days after a written demand for substantial performance is received by the
Executive from the Board of Directors of the Company which specifically identifies the manner in which the Board of Directors believes the Executive has not substantially performed the Executive’s duties; or 
  
 (b) the Executive’s willful engagement in illegal conduct or gross
misconduct which is materially and demonstrably injurious to the Company. 
  
 For purposes of this Section 1.3, no act or failure to act by the Executive shall be considered “willful” unless it is done, or omitted to be done, in bad faith and without reasonable belief that the
Executive’s action or omission was in the best interests of the Company. 
  
 1.4 “Disability” means the Executive’s absence from the full-time performance of the Executive’s duties with the Company for 180 consecutive calendar days as a result of incapacity due to
mental or physical illness as determined by a physician selected by the Company or its insurers and acceptable to the Executive or the Executive’s legal representative. 
  
 2. Term of Agreement. This Agreement, and all rights and obligations of the parties hereunder, shall take effect upon
the Effective Date and shall expire upon the first to occur of (a) the expiration of the Term (as defined below) if a Change in Control has not occurred during the Term, (b) the termination of the Executive’s employment with the Company prior
to the Change in Control Date, (c) the date 12 months after the Change in Control Date, if the Executive is still employed by the Company as of such later date, or (d) the fulfillment by the Company of all of its obligations under Section 4 if the
Executive’s employment with the Company terminates within 12 months following the Change in Control Date. “Term” shall mean the period commencing as of the Effective Date and continuing in effect through December 31, 2006;
provided, however, that commencing on January 1, 2007 and each January 1 thereafter, the Term shall be automatically extended for one additional year unless, not later than 90 days prior to the scheduled expiration of the Term (or any
extension thereof), the Company shall have given the Executive written notice that the Term will not be extended. 
  

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 3. Employment Status; Termination Following Change in Control. 
  
 3.1 Not an Employment Contract. The Executive acknowledges that this
Agreement does not constitute a contract of employment or impose on the Company any obligation to retain the Executive as an employee and that this Agreement does not prevent the Executive from terminating employment at any time. If the
Executive’s employment with the Company terminates for any reason and subsequently a Change in Control shall occur, the Executive shall not be entitled to any benefits hereunder except as otherwise provided pursuant to Section 1.2. 

 
 3.2 Termination of Employment. 
  
 (a) If the Change in Control Date occurs during the Term, any termination
of the Executive’s employment by the Company or by the Executive within 12 months following the Change in Control Date (other than due to the death of the Executive) shall be communicated by a written notice to the other party hereto (the
“Notice of Termination”), given in accordance with Section 6. Any Notice of Termination shall: (i) indicate the specific termination provision (if any) of this Agreement relied upon by the party giving such notice, (ii) to the extent
applicable, set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated and (iii) specify the Date of Termination (as defined below). The
effective date of an employment termination (the “Date of Termination”) shall be the close of business on the date specified in the Notice of Termination (which date may not be less than 15 days or more than 120 days after the date of
delivery of such Notice of Termination), in the case of a termination other than one due to the Executive’s death, or the date of the Executive’s death, as the case may be. In the event the Company fails to satisfy the requirements of
Section 3.2(a) regarding a Notice of Termination, the purported termination of the Executive’s employment pursuant to such Notice of Termination shall not be effective for purposes of this Agreement. 
  
 (b) The failure by the Company to set forth in the Notice of Termination any
fact or circumstance which contributes to a showing of Cause shall not waive any right of the Company hereunder or preclude the Company from asserting any such fact or circumstance in enforcing the Company’s rights hereunder. 
  
 (c) Any Notice of Termination for Cause given by the Company must be given
within 90 days of the occurrence of the event(s) or circumstance(s) which constitute(s) Cause. Prior to any Notice of Termination for Cause being given (and prior to any termination for Cause being effective), the Executive shall be entitled to a
hearing before the Board of Directors of the Company at which he may, at his election, be represented by counsel and at which he shall have a reasonable opportunity to be heard. Such hearing shall be held on not less than 15 days prior written
notice to the Executive stating the Board of Directors’ intention to terminate the Executive for Cause and stating in detail the particular event(s) or circumstance(s) which the Board of Directors believes constitutes Cause for termination.

  

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 4. Benefits to Executive. 
  
 4.1 Stock Acceleration. If the Change in Control Date occurs during the Term, then, each outstanding option to
purchase shares of Common Stock of the Company held by the Executive shall become immediately exercisable in full in accordance with the terms and conditions of the Company’s 1997 Stock Incentive Plan. 
  
 4.2 Compensation. If the Change in Control Date occurs during the Term
and the Executive’s employment with the Company terminates within 12 months following the Change in Control Date, the Executive shall be entitled to the following benefits: 
  
 (a) Termination Without Cause. If the Executive’s employment with the Company is terminated by the Company
(other than for Cause, Disability or death) within 12 months following the Change in Control Date, then the Executive shall be entitled to the following benefits: 
  
 (i) the Company shall pay to the Executive the following amounts: 
  
 (1) the sum of (A) the Executive’s base salary through the Date of
Termination, (B) the product of (x) the annual bonus paid or payable (including any bonus or portion thereof which has been earned but deferred) for the most recently completed fiscal year and (y) a fraction, the numerator of which is the number of
days in the current fiscal year through the Date of Termination, and the denominator of which is 365 and (C) the amount of any compensation previously deferred by the Executive (together with any accrued interest or earnings thereon) and any accrued
vacation pay, in each case to the extent not previously paid (the sum of the amounts described in clauses (A), (B), and (C) shall be hereinafter referred to as the “Accrued Obligations”), which amount shall be paid in a lump sum in cash
within 30 days after the Date of Termination; and 
  
 (2) the
amount equal to (A) one multiplied by (B) the sum of (x) the Executive’s highest annual base salary during the five-year period prior to the Change in Control Date and (y) the Executive’s highest annual bonus during the five-year period
prior to the Change in Control Date, which amount shall be paid bi-monthly until the date 12 months after the Date of Termination in an amount equal to 1/24th of the total amount set forth in this Section 4.2(a)(i)(2). 
  
 (ii) for 12 months after the Date of Termination, or such longer period as may be provided by the terms of the appropriate plan, program, practice or
policy, the Company shall continue to provide benefits to the Executive and the Executive’s family at least equal to those which would have been provided to them if the Executive’s employment had not been terminated, in accordance with the
applicable Benefit Plans in effect on the Measurement Date or, if more favorable to the Executive and his family, in effect generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies;
provided, however, that if the Executive becomes reemployed with another employer and is eligible to receive a particular type of benefits (e.g., health insurance benefits) from such employer on terms at least as favorable to the Executive
and his family as those being provided by the Company, then the Company shall no longer be required to provide those particular benefits to the Executive and his family; 
  

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 (iii) to the extent not previously paid or provided, the Company shall timely pay or provide to the
Executive any other amounts or benefits required to be paid or provided or which the Executive is eligible to receive following the Executive’s termination of employment under any plan, program, policy, practice, contract or agreement of the
Company and its affiliated companies (such other amounts and benefits shall be hereinafter referred to as the “Other Benefits”); 
  
 (iv) for purposes of determining eligibility (but not the time of commencement of benefits) of the Executive for retiree benefits to which the Executive
is entitled, the Executive shall be considered to have remained employed by the Company until 12 months after the Date of Termination; and 
  
 (v) notwithstanding anything herein to the contrary, the Company’s obligation to make the payments set forth in subsection (a)(i)(2) above and to
make the benefit payments set forth in subsection (a)(ii) above shall immediately terminate in the event that the Executive violates the provisions of any non-competition and/or non-disclosure agreement between the Executive and the Company.

  
 (b) Voluntary Resignation; Termination for Death or
Disability. If the Executive voluntarily terminates his employment with the Company within 12 months following the Change in Control Date, or if the Executive’s employment with the Company is terminated by reason of the Executive’s
death or Disability within 12 months following the Change in Control Date, then the Company shall (i) pay the Executive (or his estate, if applicable), in a lump sum in cash within 30 days after the Date of Termination, the Accrued Obligations and
(ii) timely pay or provide to the Executive the Other Benefits. 
  
 (c) Termination for Cause. If the Company terminates the Executive’s employment with the Company for Cause within 12 months following the Change in Control Date, then the Company shall (i) pay the Executive, in a lump sum in
cash within 30 days after the Date of Termination, the sum of (A) the Executive’s annual base salary through the Date of Termination and (B) the amount of any compensation previously deferred by the Executive, in each case to the extent not
previously paid, and (ii) timely pay or provide to the Executive the Other Benefits. 
  
 4.3 Mitigation. The Executive shall not be required to mitigate the amount of any payment or benefits provided for in this Section 4 by seeking other employment or otherwise. Further, except as provided in
Section 4.2(a)(ii), the amount of any payment or benefits provided for in this Section 4 shall not be reduced by any compensation earned by the Executive as a result of employment by another employer, by retirement benefits, by offset against any
amount claimed to be owed by the Executive to the Company or otherwise. 
  
 5. Successors. 
  
 5.1 Successor to
Company. The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or 
  

 -6- 

 substantially all of the business or assets of the Company expressly to assume and agree to perform this Agreement to the
same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, “Company” shall mean the Company as defined above and any successor to its business or assets as aforesaid which
assumes and agrees to perform this Agreement, by operation of law or otherwise. 
  
 5.2 Successor to Executive. This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive should die while any amount would still be payable to the Executive or his family hereunder if the Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to the executors, personal representatives or administrators of the Executive’s estate. 
  
 6. Notice. All notices, instructions and other communications given hereunder or in connection herewith shall be in writing. Any such notice,
instruction or communication shall be sent either (i) by registered or certified mail, return receipt requested, postage prepaid, or (ii) prepaid via a reputable nationwide overnight courier service, in each case addressed to the Company, at 1050
Hingham Street, Rockland, MA 02370, and to the Executive at the Executive’s address indicated on the signature page of this Agreement (or to such other address as either the Company or the Executive may have furnished to the other in writing in
accordance herewith). Any such notice, instruction or communication shall be deemed to have been delivered five business days after it is sent by registered or certified mail, return receipt requested, postage prepaid, or one business day after it
is sent via a reputable nationwide overnight courier service. Either party may give any notice, instruction or other communication hereunder using any other means, but no such notice, instruction or other communication shall be deemed to have been
duly delivered unless and until it actually is received by the party for whom it is intended. 
  
 7. Miscellaneous. 
  
 7.1
Employment by Subsidiary. For purposes of this Agreement, the Executive’s employment with the Company shall not be deemed to have terminated solely as a result of the Executive continuing to be employed by a wholly-owned subsidiary of
the Company. 
  
 7.2 Severability. The invalidity or
unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. 
  
 7.3 Governing Law. The validity, interpretation, construction and performance of this Agreement shall be governed by
the internal laws of the Commonwealth of Massachusetts, without regard to conflicts of law principles. 
  
 7.4 Waivers. No waiver by the Executive at any time of any breach of, or compliance with, any provision of this Agreement to be performed by the
Company shall be deemed a waiver of that or any other provision at any subsequent time. 
  

 -7- 

 7.5 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to
be an original but both of which together shall constitute one and the same instrument. 
  
 7.6 Tax Withholding. Any payments provided for hereunder shall be paid net of any applicable tax withholding required under federal, state or local law. 
  
 7.7 Entire Agreement. This Agreement sets forth the entire agreement
of the parties hereto in respect of the subject matter contained herein and supersedes all prior agreements, promises, covenants, arrangements, communications, representations or warranties, whether oral or written, by any officer, employee or
representative of any party hereto in respect of the subject matter contained herein; and any prior agreement of the parties hereto in respect of the subject matter contained herein is hereby terminated and cancelled. In the event that this
Agreement is terminated as a result of (a) the expiration of the Term prior to the occurrence of a Change of Control or (b) termination of the Executive’s employment by the Company prior to a Change of Control, the Employment Agreement
effective as of November 2, 2004 shall not be superceded and shall continue in full force and effect in accordance with its terms. For the avoidance of doubt, in no event shall the Executive be entitled to payments under both Section 4.2 of this
Agreement and Section 5.1 of the Employment Agreement. 
  
 7.8
Amendments. This Agreement may be amended or modified only by a written instrument executed by both the Company and the Executive. 
  
 7.9 Executive’s Acknowledgements. The Executive acknowledges that he: (a) has read this Agreement; (b) has been represented in the
preparation, negotiation, and execution of this Agreement by legal counsel of the Executive’s own choice or has voluntarily declined to seek such counsel; (c) understands the terms and consequences of this Agreement; and (d) understands that
the law firm of Wilmer Cutler Pickering Hale and Dorr LLP is acting as counsel to the Company in connection with the transactions contemplated by this Agreement, and is not acting as counsel for the Executive. 
  
 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first set forth above. 
  

			
	BIOSPHERE MEDICAL, INC.
		
	By:	 	 /s/ John H. MacKinnon

	Title:	 	Chairman, Compensation Committee
	
	 /s/ Richard J. Faleschini

	 RICHARD J. FALESCHINI

	
	 Address:

	
	 4730 Yuma Lane North

	
	 Plymouth, MN 55446-2051

  

 -8-Agreement for 7th Modification of Deeds of Trust and Other Loan Instruments

 EXHIBIT 10.3 
  
 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: 
  

 1 

 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; 

  

	 	(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; 
  
 (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; 
  

 4 

 (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. 
  
 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: 
  

 5 

 (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:
 Title:
	 	 Kent Newberry
 Vice President

  

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

					
	 	 	 	 	 	 	By:	 	 /S/    MICHAEL D. GRUBBS

	 	 	 	 	 	 	 Name:
 Title:
	 	 Michael D. Grubbs
 Senior Vice President and Chief
Financial Officer

  

									
					
	 	 	 	 	 	 	By:	 	 /S/    RICHARD S. ROBINSON

	 	 	 	 	 	 	 Name:
 Title:
	 	 Richard S. Robinson
 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):
  

	 	 	 Ratio 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%
	  
 2. Loan Agreement
	 	  
 (i)       Paragraph 19. The foregoing is hereby amended to delete the existing reference to the Facility Fee

  

 8 

					
	 	 	            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, until all such outstanding amounts, and
all other obligations, under and with respect to such Other

  

 9 

					
	 	 	            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:
 Title:
	 	 Michael D. Grubbs
 Senior Vice President and Chief
Financial Officer

					
	 	 	 	 	 	 	By:	 	/s/    RICHARD S. ROBINSON        
	 	 	 	 	 	 	 Name:
 Title:
	 	 Richard S. Robinson
 Senior Vice
President

  

 12 

 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 JUNIOR LIENHOLDER 
  
 The undersigned is the holder of an obligation secured by a lien (the “Junior Lienholder”) against the same property, which secures, in a senior
priority position, Borrower’s obligations to Lender under the Loan Agreement and the other Loan Instruments. The undersigned consents to and accepts the modifications set forth in the foregoing Seventh Memorandum and the Seventh Modification
described therein, and agrees that, notwithstanding such modifications, the undersigned’s lien shall be and remain junior and subordinate to the lien of Lender to secure Borrower’s obligations, as modified herein, to the extent provided in
and subject to all of the terms of the following Subordination Agreements, which Agreements remain in effect: 
  
 A) Ambridge @ Quail Hill: i) (1103) dated June 13, 2003 and recorded in the Official Records of Orange County, California on July 11, 2003 as Instrument No. 2003-000819536; ii) (1117) dated October 7, 2003 and
recorded in the Official Records of Orange County, California on October 23, 2003 as Instrument No. 2003-001308789; iii) (1134) dated February 6, 2004 and recorded in the Official Records of Orange County, California on February 13, 2004 as
Instrument No. 2004-0105885; (iv) (1137) dated March 25, 2004 and recorded in the Official Records of Orange County, California on April 9, 2004 as Instrument No. 2004-000297894; and (v) (1151) dated June 21, 2004 and recorded in the Official
Records of Orange County, California on July 1, 2004 as Instrument No. 2004-000603412. 
  

									
	 	 	 	 	 IRVINE COMMUNITY DEVELOPMENT COMPANY LLC,
 a Delaware limited liability company
  

					
	 	 	 	 	 	 	By:	 	/s/    CYNTHIA R. DAILY        
	 	 	 	 	 	 	 Name:
 Title:
	 	 Cynthia R. Daily
 Senior Director

					
	 	 	 	 	 	 	By:	 	/s/    NICHOLAS A. REICHERT        
	 	 	 	 	 	 	 Name:
 Title:
	 	 Nicholas A. Reichert
 Assistant
Secretary

  

 13

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