Document:

Cardinal Health, Inc. Global Employee Stock Purchase Plan

 Exhibit 10.04 
 Cardinal Health, Inc. 
 Global Employee Stock Purchase Plan 
 Section 1 - Purpose 
 The
Cardinal Health, Inc. Global Employee Stock Purchase Plan, originally adopted and established by Cardinal Health, Inc., an Ohio corporation, effective as of July 1, 2000, for the general benefit of the Employees of the Company and of certain of
its Subsidiaries, is hereby amended and restated effective as of May 10, 2006. The purpose of the Plan is to facilitate the purchase of Shares by Eligible Employees. 
 Section 2 - Definitions 
  

	a.	“Act” shall mean the Securities Act of 1933, as amended. 

  

	b.	“Administrator” shall mean the Human Resources and Compensation Committee of the Board of Directors of the Company, or the person(s) or entity delegated the
responsibility of administering the Plan. 

  

	c.	“Agent” shall mean the bank, brokerage firm, financial institution, or other entity or person(s) engaged, retained or appointed to act as the agent of the Employer
and of the Participants under the Plan. 

  

	d.	“Board” shall mean the Board of Directors of the Company. 

  

	e.	“Closing Value” shall mean, as of a particular date, the value of a Share determined by the closing sales price for such Share (or the closing bid, if no sales were
reported) as quoted on The New York Stock Exchange for the date of determination as reported in The Wall Street Journal or such other source as the Administrator deems reliable. For this purpose, the date of determination shall be the first
Trading Day of the Offering Period or the last Trading Day of the Offering Period, as applicable. 

  

	f.	“Code” shall mean the U.S. Internal Revenue Code of 1986, as amended and currently in effect, or any successor body of federal tax law. 

  

	g.	“Company” shall mean Cardinal Health, Inc., including any successor thereto. 

  

	h.	 “Compensation,” unless otherwise required by local law, shall mean wages, salaries, fees for professional services and other amounts received for
personal services actually rendered in the course of employment with the Employer (including, but not limited to, commissions paid to salesmen, compensation for services on the basis of a percentage of profits, commissions on insurance premiums,
tips and bonuses) including amounts excludible from the Employee’s gross income under Code Section 402(a)(8) (relating to a Code Section 401(k) arrangement), Code Section 402(h) (relating to a Simplified Employee Pension), Code
Section 125 (relating to a cafeteria plan) or Code Section 403(b) (relating to a tax-sheltered annuity) and compensation paid by the Employer to an Employee through another person under the common paymaster provisions of Code Sections
3121(s) and 3306(p) or under applicable savings or pension plans of the Employer of the Employee. Compensation does not include, unless otherwise required by local law: (1) amounts realized from the exercise or sale of a non-qualified stock
option, or (2) amounts realized when restricted stock (or property) held by an Employee either becomes freely transferable or is no longer subject to a substantial risk of forfeiture or becomes fully owned by the Employee, or (3) amounts
realized from the exercise, sale, exchange, or other disposition of stock acquired under a qualified or incentive stock option, (4) moving allowances, automobile allowances, tuition reimbursement, financial/tax planning reimbursement, lunch
vouchers, house allowances, and other allowances that receive special tax benefits, other extraordinary compensation, including tax “gross-up” payments, and imputed income from other 

  

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employer-provided benefits, and (5) other amounts that receive special tax benefits, such as premiums for group term life insurance or contributions
made by the Employer (whether or not under a salary reduction agreement) or mandatory payments made by the Employer to the Employee under the applicable law of the jurisdiction in which the Employer of the Employee is located or the Employee is
employed or resides. 

  

	i.	“Designated Subsidiaries” shall mean all Subsidiaries whose Employees have been designated by the Administrator, in its sole discretion, as eligible to participate
in the Plan. 

  

	j.	“Eligible Employee” means an Employee of the Designated Subsidiary who is designated to participate in the Plan at the sole discretion of the Designated Subsidiary;
provided, however, that such discretion shall not be exercised in violation of the applicable labor or other laws, including but not limited to laws relating to discrimination based on gender, race, disability, age, national or social origin,
political opinion, union membership or religious belief, or collective bargaining or other negotiated agreements. 

  

	k.	“Employee” means any person who is a regular, full time or part time employee of the Employer for at least 30 days and who is normally included in the authorized
staffing target and budget. Employee also includes an employee who has been hired on a temporary contract but who is expected to fill a permanent staffing need and who is classified as a “PRN” or “on-call employee.” Employees
shall not include unionized employees as defined by the regular practices of the Employer participating in the Plan to the extent permissible under local law. 

  

	l.	“Employer” means, individually and collectively, the Company and the Designated Subsidiaries. 

  

	m.	“Enrollment Period” shall mean the period immediately preceding the Offering Period that is designated by the Administrator in its discretion as the period during
which an Eligible Employee may elect to participate in the Plan. 

  

	n.	“Offering Period” shall mean the period during which Participants in the Plan authorize payroll deductions to fund the purchase of Shares on their behalf under the
Plan pursuant to the options granted to them hereunder or the period during which participants in the Plan provide alternative contributions for the same purpose. Alternative contributions for the purpose of this Plan shall mean the payment of
contributions through personal checks of the Participants or such other means of contributing to the Plan as authorized by the Administrator from time to time. 

  

	o.	“Participant” shall mean any Eligible Employee who has elected to participate in the Plan for an Offering Period by authorizing payroll deductions or by making
alternative contributions and following all applicable procedures established by the Administrator during the Enrollment Period for such Offering Period. 

  

	p.	“Plan” shall mean this Cardinal Health, Inc. Global Employee Stock Purchase Plan, as amended from time to time. 

  

	q.	“Plan Account” shall mean the individual account established for each Participant for purposes of accounting for and/or holding each Participant’s payroll
deductions, alternative contributions, Shares, etc. 

  

	r.	“Plan Year” shall mean the fiscal year of the Company. 

  

	s.	“Purchase Price” shall mean, for each Share purchased in accordance with Section 4 hereof, an amount equal to the lesser of (1) eighty-five percent
(85%) of the Closing Value of a Share on the first Trading Day of each Offering Period, or the earliest date thereafter as is administratively feasible (which for Plan purposes shall be deemed to be the date the option to purchase such Shares
was granted to each Eligible Employee who is, or elects to become, a Participant); or (2) eighty-five percent (85%) of the Closing Value of such Share on the last Trading Day of the Offering Period, or the earliest date thereafter as is
administratively feasible (which for Plan purposes shall be deemed to be the date each such option to purchase such Shares was exercised). 

  

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	t.	“Shares” means the common shares, without par value, of the Company. 

  

	u.	“Subsidiary” shall mean a corporation or other entity, domestic or foreign, of which not less than fifty percent (50%) of the voting shares are held by the
Company or a Subsidiary (except for the U.K. in which this term shall mean a corporation or other entity, domestic or foreign, of which more than fifty percent (50%) ownership of the voting shares are held by the Company or a Subsidiary)
whether or not such corporation or other entity now exists or is hereafter organized or acquired by the Company or a Subsidiary (or as otherwise may be defined in Code Section 424). 

  

	v.	“Trading Day” shall mean a day on which The New York Stock Exchange is open for trading. 

 Section 3 - Eligible Employees 
 a. In General. Participation
in the Plan is voluntary. Except as otherwise provided in Section 17, all Eligible Employees of an Employer are eligible to participate in the Plan. All Eligible Employees granted options to purchase Shares hereunder shall have the same rights
and privileges as every other such Eligible Employee, and only Eligible Employees of an Employer satisfying the applicable requirements of the Plan will be entitled to be granted options hereunder. 
 b. Limitations on Rights. An Employee who otherwise is an Eligible Employee shall not be entitled to purchase Shares under the Plan if such
purchase would cause such Eligible Employee to own Shares (including any Shares which would be owned if such Eligible Employee purchased all of the Shares made available for purchase by such Eligible Employee under all options or rights then held by
such Eligible Employee, whether or not then exercisable) representing five percent (5%) or more of the total combined voting power or value of each class of stock of the Company or any Subsidiary. 
 Section 4 - Enrollment and Offering Periods 
 a. Enrolling in the Plan. To participate in the Plan, an Eligible Employee must enroll in the Plan. Enrollment for a given Offering Period will take place during the Enrollment Period for such Offering Period.
The Administrator shall designate the initial Enrollment Period and each subsequent Enrollment Period and the Offering Period to which each Enrollment Period relates. Participation in the Plan with respect to any one or more of the Offering Periods
shall neither limit nor require participation in the Plan for any other Offering Period. 
 b. The Offering Period. Any Employee who
is an Eligible Employee and who desires to be granted options to purchase Shares hereunder must enroll in accordance with the procedures established by the Administrator during an Enrollment Period. Such authorization shall be effective for the
Offering Period immediately following such Enrollment Period. The duration of an Offering Period shall be determined by the Administrator prior to the Enrollment Period and shall commence on the first day (or the first Trading Day) of the Offering
Period and end on the last day (or the last Trading Day) of the Offering Period; provided, however, that if the Administrator terminates the Plan during an Offering Period, pursuant to its authority in Section 17 of the Plan, such Offering
Period shall be deemed to end on the date the Plan is terminated. The termination of the Plan and the Offering Period shall end the Participant’s rights to contribute amounts to the Plan or continue participation in the Offering Period. The
date of termination of the Plan shall be deemed to be the final day of the Offering Period for purposes of determining the Purchase Price under the Offering Period and all amounts contributed during the Offering Period will be used as of such
termination date to purchase Shares in accordance with the provisions of Section 9 of this Plan. 
 The Administrator may designate one
or more Offering Periods during each Plan Year during the term of this Plan. On the first day (or the First Trading Day) of each Offering Period, each Participant shall be granted an option to purchase Shares under the Plan. Each option granted
hereunder shall expire at the end of the Offering Period for which it was granted. In no event may an option granted hereunder be exercised after the expiration of 27 months from the date of grant. 
  

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 c. Changing Enrollment. The offering of Shares pursuant to options granted under the Plan shall
occur only during an Offering Period and shall be made only to Participants. Once an Eligible Employee is enrolled in the Plan, the Administrator or Employer will inform the Agent of such fact. Once enrolled, a Participant shall continue to
participate in the Plan for each successive Offering Period until he or she terminates his or her participation by revoking his or her payroll deduction or alternative contribution authorization or by not contributing his or her alternative
contributions or by ceasing to be an Eligible Employee. Once a Participant has elected to participate under the Plan, that Participant’s payroll deduction authorization or alternative contribution authorization shall apply to all subsequent
Offering Periods unless and until the Participant ceases to be an Eligible Employee, or modifies or terminates said authorization. If a Participant desires to change his or her rate of contribution, he or she may do so effective for the next
Offering Period by following the procedures established by the Administrator during the Enrollment Period immediately preceding such Offering Period. 
 Section 5 - Term of Plan 
 This Plan shall be in effect from July 1, 2000, until it
is terminated by action of the Administrator or the Board. 
 Section 6 - Number of Shares to Be Made Available 

Subject to adjustment as provided in Section 16 hereof, the total number of Shares made available for purchase by Participants granted options
which are exercised under Section 9 hereof is 4.5 million, which may consist of authorized but unissued shares, treasury shares, or shares purchased by the Plan in the open market. The provisions of Section 9 b. shall control in the
event the number of Shares covered by options which are exercised for any Offering Period exceeds the number of Shares available for sale under the Plan. If all of the Shares authorized for sale under the Plan have been sold, the Plan shall either
be continued through additional authorizations of Shares made by the Administrator (such authorizations must, however, comply with Section 17 hereof), or shall be terminated in accordance with Section 17 hereof. 
 Section 7 - Use of Funds 
 All payroll deductions or alternative contributions received or held by an Employer under the Plan will be used to purchase Shares in accordance with the provisions of this Plan. Any amounts held by an Employer or other party holding
amounts in connection with or as a result of payroll withholding or alternative contribution made pursuant to the Plan and pending the purchase of Shares hereunder shall be considered a non-interest-bearing, unsecured indebtedness extended to the
Employer or other party by the Participants, unless otherwise required under applicable local law or securities regulatory body requirements of the country in which the Employer of the Employee is located or the Employee is employed or resides, as
the case may be. Administrative expenses of the Plan shall be allocated to each Participant’s Plan Account unless such expenses are paid by the Employer. 
 Section 8 - Amount of Contribution; Method of Payment 
 a. Payroll Withholding or
Payroll Deduction or Alternative Contributions. Except as otherwise specifically provided herein, the Purchase Price will be payable by each Participant by means of payroll withholding. The withholding or alternative contributions shall be in
increments of one percent (1%). Unless otherwise authorized by the Administrator, the minimum withholding or alternative contributions permitted shall be an amount equal to one percent (1%) of a Participant’s Compensation and the maximum
withholding or alternative contributions shall be an amount equal to fifteen percent (15%) of a Participant’s Compensation. In any event, the total withholding or alternative contributions permitted to be made by any Participant for a
calendar year shall be limited to the sum of legal currency equivalent of U.S. $21,250. The actual percentage of Compensation to be deducted or contributed shall be specified by a Participant in his or her authorization to participate in the Plan.
Unless otherwise authorized by the Administrator, Participants may not deposit any separate cash payments into their Plan Accounts. 
  

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 b. Application of Withholding Rules. Payroll withholding will commence with the first payroll
issued during the Offering Period and will, except as otherwise provided herein, continue with each payroll throughout the entire Offering Period, except for pay periods for which such Participant receives no compensation (e.g., uncompensated
personal leave, leave of absence). A pay period which ends at such time that it is administratively impracticable to credit any payroll for such pay period to the then-current Offering Period will be credited in its entirety to the immediately
subsequent Offering Period. A pay period which overlaps Offering Periods will be credited in its entirety to the Offering Period in which it is paid. Alternative contributions will be made in accordance with the procedure established by the
Administrator. Payroll withholding or alternative contributions shall be retained by the Employer or other party, designated by the Administrator or the Employer as the case may be, until applied to the purchase of Shares as described in
Section 9 hereof and the satisfaction of any related federal, state, local or other tax withholding obligations (including any employment tax obligations). 
 At the time the Shares are purchased, or at the time some or all of the Shares issued under the Plan are disposed of, Participants must make adequate provision for the Employer’s federal, state, local or other
tax withholding obligations (including employment taxes), if any, which arise upon the purchase or disposition of the Shares. At any time, the Employer may withhold from each Participant’s Compensation the amount necessary for the Employer to
meet applicable withholding obligations, including any withholding required to make available to the Employer any tax deductions or benefits attributable to the sale or early disposition of Shares by the Participant. Each Participant, as a condition
of participating under the Plan, agrees to bear responsibility for all federal, state, local and other income taxes required to be withheld from his or her Compensation as well as the Participant’s portion of FICA (both the OASDI and Medicare
components), and other applicable social security or similar such taxes, with respect to any Compensation arising on account of the purchase or disposition of Shares. The Employer may increase income and/or employment tax withholding on a
Participant’s Compensation after the purchase or disposition of Shares in order to comply with federal, state, local and other tax laws, and each Participant agrees to sign any and all appropriate documents to facilitate such withholding.

 Section 9 - Purchasing, Transferring Shares 
 a. Maintenance of Plan Account. Upon the exercise of a Participant’s initial option to purchase Shares under the Plan, the Agent shall
establish a Plan Account in the name of such Participant. No later than the close of each Offering Period, the aggregate amount deducted during such Offering Period by the Employer from a Participant’s Compensation, or alternative contributions
made to the Plan by the Participant (and credited to an account maintained by the Employer or other party for bookkeeping purposes) will be communicated by the Employer to the Agent and shall thereupon be credited by the Agent to such
Participant’s Plan Account (unless the Participant has given notice to the Administrator of his or her revocation of authorization prior to the date such communication is made). As of the last day of each Offering Period, or as soon thereafter
as is administratively practicable, each Participant’s option to purchase Shares will be exercised automatically for him or her by the Agent with respect to those amounts reported to the Agent by the Administrator or Employer as creditable to
that Participant’s Plan Account. On the date of exercise, the amount then credited to the Participant’s Plan Account for the purpose of purchasing Shares hereunder will be divided by the Purchase Price and there shall be transferred to the
Participant’s Plan Account by the Agent the number of whole and/or fractional shares which results, as permitted by local law. 
 The
Agent shall hold in its name, or in the name of its nominee, all Shares so purchased and allocated. No certificate will be issued to a Participant for Shares held in his or her Plan Account unless he or she so requests in writing or unless such
Participant’s active participation in the Plan is terminated due to death, disability, separation from service or retirement. Notwithstanding any provision herein to the contrary, no certificates shall be issued for Shares until such Shares
have been held in the Participant’s Plan Account for a period of at least 24 months following the date of the granting of the option to purchase such Shares. Participation in the Plan, purchase, ownership and sale of Shares under the Plan, is
subject to risk of fluctuation in Shares’ price and currency exchange. 
 b. Insufficient Number of Available Shares. In the
event the number of Shares covered by options which are exercised for any Offering Period exceeds the number of Shares available for sale under the Plan, the number of Shares actually available for sale hereunder shall be limited to the remaining
number of Shares authorized for sale under the Plan and shall be allocated by the Agent among the Participants in proportion to each 

  

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Participant’s Compensation during the Offering Period over the total Compensation of all Participants during the Offering Period. Any excess amounts
withheld and credited to Participants’ Plan Accounts then shall be returned to the Participants as soon as is administratively practicable. 
 c. Handling Excess Shares. In the event that the number of Shares which would be credited to any Participant’s Plan Account in any Offering Period exceeds the limit specified in Section 3 b. hereof, such Participant’s
Plan Account shall be credited with the maximum number of Shares permissible, and the remaining amounts will be refunded in cash as soon as administratively practicable. 
 d. Status Reports. Statements of each Participant’s Plan Account shall be given to Participants at least annually. 
 Section 10 - Dividends and Other Distributions 
 a. Reinvestment of Dividends.
Subject to applicable law, cash dividends and other cash distributions received by the Agent on Shares held in its custody hereunder will be credited to the Plan Accounts of individual Participants in accordance with such Participants’
interests in the Shares with respect to which such dividends or distributions are paid or made. Cash dividends will be applied, as soon as practicable after the receipt thereof by the Agent, in accordance with the directions of the individual
Participant to whose Plan Account such amounts have been credited. Participants may, but are not required to, direct that such cash dividends be applied to the purchase in the open market at prevailing market prices of the number of whole Shares
capable of being purchased with such funds (or the portion of such funds designated for such application by the Participant), after deduction of any bank service fees, brokerage charges, transfer taxes, and any other transaction fee, expense or cost
payable in connection with the purchase of such Shares and not otherwise paid by the Employer, and subject to the Company’s obligation to withhold federal, state or other local taxes. 
 b. Shares to Be Held in Agent’s Name. All purchases of Shares made pursuant to this Section will be made in the name of the Agent or its
nominee, shall be held as provided in Section 9 hereof, and shall be transferred and credited to the Plan Account(s) of the individual Participant(s) to which such dividends or other distributions were credited. Dividends paid in the form of
Shares will be allocated by the Agent, as and when received, with respect to Shares held in its custody hereunder to the Plan Accounts of individual Participants in accordance with such Participants’ interests in such Shares with respect to
which such dividends were paid. Property, other than Shares or cash, received by the Agent as a distribution on Shares held in its custody hereunder, shall be sold by the Agent for the accounts of the Participants, and the Agent shall treat the
proceeds of such sale in the same manner as cash dividends received by the Agent on Shares held in its custody hereunder. 
 c. Tax
Responsibilities. The reinvestment of dividends under the Plan will not relieve a Participant (or Eligible Employee with a Plan Account) of any income or other tax that may be due on or with respect to such dividends. The Agent shall report to
each Participant (or Eligible Employee with a Plan Account) the amount of dividends credited to his or her Plan Account. 
 Section 11 - Voting of Shares 
 A Participant shall have no interest or voting right in the Shares covered by
his or her option until such option has been exercised. Shares held for a Participant (or Eligible Employee with a Plan Account) in his or her Plan Account will be voted in accordance with the Participant’s (or Eligible Employee’s) express
directions. In the absence of any such directions, such Shares will not be voted. 
 Section 12 - In-Service Distribution or Sale
of Shares 
 a. Sale of Shares. Subject to the provisions of Section 19 hereof, a Participant may at any time, and
without withdrawing from the Plan, by giving notice to the Agent, direct the Agent to sell all or part of the Shares held on behalf of the Participant. Upon receipt of such a notice, the Agent shall, as soon as practicable after receipt of such
notice, sell such Shares in the marketplace at the prevailing market price and transmit the net 

  

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proceeds of such sale (less any bank service fees, brokerage charges, transfer taxes, and any other transaction fee, expense or cost) to the
Participant’s Plan Account. 
 b. In-Service Share Distributions. A Participant may, without withdrawing from the Plan, request
that a certificate for all or part of the whole number of Shares held in his or her Plan Account be sent to him or her after the relevant Shares have been purchased and allocated subject to the requirement that such Shares be held in the
Participant’s Plan Account for a period of at least 24 months after the date of the granting of the option, as described in Section 9 a., above. All such requests must be submitted in writing to the Agent. No certificate for a fractional
Share will be issued; the fair value of fractional Shares on the date of withdrawal of all Shares credited to a Participant’s Plan Account shall be paid in cash to such Participant. The Plan may impose a reasonable charge, to be paid by the
Participant, for each stock certificate so issued prior to the date active participation in the Plan ceases; such charge shall be paid by the Participant to the Administrator or Employer prior to the date any distribution of a certificate evidencing
ownership of such Shares occurs. 
 Section 13 - Cessation of Active Participation 
 A Participant may revoke his or her authorization for payroll deduction or alternative contributions for an Offering Period by giving notice to the
Administrator or Employer in accordance with procedures established by the Administrator from time to time. Any payroll deductions or alternative contributions made for an Offering Period prior to the effective date of the revocation of the
deduction authorization or alternative contributions by the Participant shall be refunded to the Participant in cash. A Participant who revokes authorization for payroll deduction or does not make alternative contributions may not again participate
under the Plan until the next Offering Period immediately subsequent to the Offering Period during which the Participant revoked payroll deduction authorization or did not make alternative contributions with respect thereto. 
 Section 14 - Separation from Employment 
 Separation from employment for any reason, including death, disability, termination or retirement, shall be deemed to be a cessation of active participation in the Plan and shall be treated as though the Participant
revoked his or her authorization for payroll deductions or alternative contributions under Section 13, above. If a Participant has a separation from employment but is re-employed as an Eligible Employee, he or she shall be treated as a new
Eligible Employee. The Administrator shall, in its sole discretion, determine what constitutes a separation from employment for purposes of this Section. 
 Section 15 - Assignment 
 Neither payroll deductions nor alternative contributions
credited to a Participant’s Plan Account nor any rights to purchase Shares under the Plan may be assigned, alienated, transferred, pledged, or otherwise disposed of in any way by a Participant other than by will or the laws of descent and
distribution. Any such assignment, alienation, transfer, pledge, or other disposition shall be without effect, except that the Administrator may treat such act as an election to withdraw from the Plan. A Participant’s right to purchase Shares
under this Plan may be exercisable during the Participant’s lifetime only by the Participant. To the extent permitted by local law, a Participant’s Plan Account shall be payable to the Participant’s designated beneficiary or, if none,
to the Participant’s estate upon his or her death. 
 Section 16 - Adjustment of and Changes in Shares 
 If at any time after the effective date of the Plan the Company shall subdivide or reclassify the Shares which have been or may be optioned under the
Plan, or shall declare thereon any stock split or dividend payable in Shares, or shall alter the capital structure of the Shares or the Company in any similar manner, then the number and class of shares held in the Plan and which may thereafter be
optioned (in the aggregate and to any Participant) shall be adjusted accordingly, and in the case of each option outstanding at the time of any such action, the number and class of shares which may thereafter be purchased pursuant to such option and
the Purchase Price shall be adjusted accordingly, as necessary to preserve the rights of the holder(s) of such Shares and option(s). 
  

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 Section 17 - Amendment or Termination of the Plan 
 The Administrator shall have the right, at any time, to amend, modify or terminate the Plan without notice; provided, however, that no Participant’s
existing options shall be adversely affected by any such amendment, modification or termination, except to comply with applicable law, stock exchange rules or accounting rules. Notwithstanding the foregoing, the Administrator shall have the right to
terminate the Plan with respect to all future payroll deductions and related purchases at any time. Such termination of the Plan shall also terminate any current Offering Period in accordance with Section 4 of the Plan. 
 Designations of participating corporations may be made from time to time from among a group of corporations consisting of the Employer, its parent and
its Subsidiaries (including corporations that become Subsidiaries or a parent after the adoption and approval of the Plan). Such designation may permit participation in the Plan of all of the Eligible Employees working for the corporation or only
those Eligible Employees who work for the corporation in a particular country or countries. 
 The Administrator may amend or modify the Plan
or make regulations for the operation of the Plan that are not inconsistent with these rules to apply to Employees and Participants who are employed or resident outside of the United States of America in accordance with the relevant law.
“Relevant law” shall mean the applicable law of the jurisdiction in which the Employer of the Employee is located or where the Employee is employed or resides and the securities regulatory body requirements and the taxation requirements of
that same jurisdiction. 
 Section 18 - Administration 
 a. Administration. The Plan shall be administered by the Administrator. The Administrator shall be responsible for the administration of all
matters under the Plan which have not been delegated to the Agent. The Administrator shall have full and exclusive discretionary authority to construe, interpret and apply the terms of the Plan, to determine eligibility and to adjudicate all
disputed claims filed under the Plan. Any rule or regulation adopted by the Administrator shall remain in full force and effect unless and until altered, amended or repealed by the Administrator. 
 b. Specific Responsibilities. The Administrator’s responsibilities shall include, but shall not be limited to: 
  

	 	(1)	interpreting the Plan (including issues relating to the definition and application of “Compensation”); 

  

	 	(2)	identifying and compiling a list of persons who are Eligible Employees for an Offering Period; 

  

	 	(3)	identifying those Eligible Employees not entitled to be granted options or other rights for an Offering Period on account of the limitations described in Section 3 b. hereof;
and 

  

	 	(4)	providing to Participants upon request Company financial statements which are publicly available. 

 The Administrator may from time to time adopt rules and regulations for carrying out the terms of the Plan. Interpretation or construction of any provision of the Plan by the Administrator shall be final and
conclusive on all persons, absent specific and contrary action taken by the Board. Any interpretation or construction of any provision of the Plan by the Administrator or the Board shall be final and conclusive. 
  

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 Section 19 - Securities Law and Other Restrictions 
 Notwithstanding any provision of the Plan to the contrary, no payroll deductions or alternative contributions shall take place and no Shares may be
purchased under the Plan until a registration statement has been filed and become effective with respect to the issuance of the Shares covered by the Plan under the Act and any other required action has been taken under any other applicable law of
the jurisdiction in which the Employer of the Employee is located or the Employee is employed or resides. Prior to the effectiveness of such registration statement, Shares subject to purchase under the Plan may be offered to Eligible Employees only
pursuant to an exemption from the registration requirements of the Act and pursuant to any other action that is required under any other applicable law of the jurisdiction in which the Employer of the Employee is located or the Employee is employed
or resides. 
 Section 20 - No Independent Employee’s Rights 
 Nothing in the Plan shall be construed to be a contract of employment between an Employer or its parent or any Subsidiary and any Employee, or any group
or category of Employees (whether for a definite or specific duration or otherwise), or to prevent the Employer, its parent or any Subsidiary from terminating any Employee’s employment at any time, without notice or recompense to the extent
permissible under local law. Nothing in this Plan shall be construed as conferring any rights of a shareholder in any Employee or any other person until the option to purchase Shares granted to the Employee hereunder has been exercised. 

Section 21 - Applicable Law 
 The Plan shall be construed, administered and governed in all respects under the laws of the State of Ohio to the extent such laws are not preempted or controlled by federal law. 
 Section 22 - Merger or Consolidation 
 If the Company shall at any
time merge into or consolidate with another corporation or business entity, each Participant will thereafter be entitled to receive at the end of the Offering Period (during which such merger or consolidation occurs) the securities or property which
a holder of Shares was entitled to upon and at the time of such merger or consolidation. A sale of all or substantially all of the assets of the Company shall be deemed a merger or consolidation for the foregoing purposes. 
  

 Page 9Loan Agreement dated as of January 30, 2007

 Exhibit 10.1 
 LOAN AGREEMENT 
 Dated as of January 30, 2007 
 Between 
 EAST GARRISON PARTNERS I,
LLC, 
 a California limited liability company 
 “Borrower” 
 and 
 RESIDENTIAL FUNDING COMPANY, LLC, 
 a Delaware limited liability company

 “Lender” 

							
	 ARTICLE 1
	  	1
				
		  	 Section 1.1
	  	 Loan Summary
	  	1
				
		  	 Section 1.2
	  	 Certain Defined Terms
	  	2
				
		  	 Section 1.3
	  	 Other Definitional Provisions
	  	17
		
	 ARTICLE 2
	  	18
				
		  	 Section 2.1
	  	 Agreement to Lend and Borrow
	  	18
				
		  	 Section 2.2
	  	 Evidence of Indebtedness
	  	18
				
		  	 Section 2.3
	  	 Use of Disbursements
	  	18
				
		  	 Section 2.4
	  	 Commitment Fee
	  	18
				
		  	 Section 2.5
	  	 No Reduction in Commitment Fee
	  	19
				
		  	 Section 2.6
	  	 Interest
	  	19
				
		  	 Section 2.7
	  	 Interest Rate Limitation
	  	20
				
		  	 Section 2.8
	  	 Repayment of Principal
	  	20
				
		  	 Section 2.9
	  	 Prepayment of the Loan
	  	21
				
		  	 Section 2.10
	  	 Payments
	  	21
				
		  	 Section 2.11
	  	 Applications of Payments; Late Charges and Default Rate
	  	21
				
		  	 Section 2.12
	  	 Revolving Nature of Loan
	  	22
				
		  	 Section 2.13
	  	 Security
	  	22
		
	 ARTICLE 3
	  	23
				
		  	 Section 3.1
	  	 Closing
	  	23
				
		  	 Section 3.2
	  	 Conditions to Disbursement
	  	23
				
		  	 Section 3.3
	  	 Application of Disbursements
	  	25
				
		  	 Section 3.4
	  	 Disbursements Notwithstanding Noncompliance
	  	25
				
		  	 Section 3.5
	  	 Commencement of Development Work in Phases
	  	26
		
	 ARTICLE 4
	  	27
				
		  	 Section 4.1
	  	 Consideration
	  	27
				
		  	 Section 4.2
	  	 Organization
	  	27
				
		  	 Section 4.3
	  	 Authorization
	  	27
				
		  	 Section 4.4
	  	 Governmental Consents
	  	27
				
		  	 Section 4.5
	  	 Validity
	  	28
				
		  	 Section 4.6
	  	 Financial Position
	  	28
				
		  	 Section 4.7
	  	 Governmental Regulations
	  	28
				
		  	 Section 4.8
	  	 Employee Benefit Plans
	  	28

  

 i 

					
	 Section 4.9
	  	 Securities Activities
	  	28
			
	 Section 4.10
	  	 No Material Adverse Change
	  	28
			
	 Section 4.11
	  	 Payment of Taxes
	  	28
			
	 Section 4.12
	  	 Litigation
	  	29
			
	 Section 4.13
	  	 Environmental Matters
	  	29
			
	 Section 4.14
	  	 No Burdensome Restrictions
	  	29
			
	 Section 4.15
	  	 Full Disclosure
	  	29
			
	 Section 4.16
	  	 Adequate Consideration
	  	29
			
	 Section 4.17
	  	 USA Patriot Act
	  	30
			
	 Section 4.18
	  	 Development Agreement and Disposition and Development Agreement

	  	30
		
	 ARTICLE 5        COVENANTS OF BORROWER
	  	31
			
	 Section 5.1
	  	 Consideration
	  	31
			
	 Section 5.2
	  	 Reporting Requirements
	  	31
			
	 Section 5.3
	  	 Borrower’s Operations and Management
	  	34
			
	 Section 5.4
	  	 Insurance
	  	35
			
	 Section 5.5
	  	 Financial Covenants
	  	36
			
	 Section 5.6
	  	 Incurrence of Debt
	  	37
			
	 Section 5.7
	  	 No Transfers
	  	37
			
	 Section 5.8
	  	 USA Patriot Act
	  	37
			
	 Section 5.9
	  	 Further Assurances; Cooperation
	  	38
			
	 Section 5.10
	  	 Development Work Must Be Included in Budget
	  	38
			
	 Section 5.11
	  	 Recordation of Final Maps
	  	38
			
	 Section 5.12
	  	 Development Agreement and Disposition and Development Agreement
	  	38
			
	 Section 5.13
	  	 Management
	  	38
			
	 Section 5.14
	  	 Development Work in any Phase
	  	38
			
	 Section 5.15
	  	 Certain Permits/Licenses
	  	39
			
	 Section 5.16
	  	 Homebuilders
	  	39
		
	 ARTICLE 6        THE PROJECT
	  	40
			
	 Section 6.1
	  	 Consideration
	  	40
			
	 Section 6.2
	  	 Title to Project
	  	40
			
	 Section 6.3
	  	 No Prior Liens or Claims
	  	40

  

 ii 

					
	 Section 6.4
	  	 Access to the Project
	  	40
			
	 Section 6.5
	  	 Compliance with Laws and Regulations
	  	41
			
	 Section 6.6
	  	 Covenants, Zoning, Codes, Permits and Consents
	  	41
			
	 Section 6.7
	  	 Utilities
	  	41
			
	 Section 6.8
	  	 Survey, Map, Permits, Licenses and Approvals
	  	41
			
	 Section 6.9
	  	 Plans and Specifications; Budget
	  	41
			
	 Section 6.10
	  	 Changes to Plans and Specifications and Budget
	  	42
			
	 Section 6.11
	  	 Adequacy of Loan Amount
	  	44
			
	 Section 6.12
	  	 Construction Start and Completion
	  	44
			
	 Section 6.13
	  	 Personal Property Incorporation
	  	44
			
	 Section 6.14
	  	 Contractors and Contracts
	  	44
			
	 Section 6.15
	  	 Evidence of Ownership of Materials
	  	45
			
	 Section 6.16
	  	 Lender Inspections, Appraisal and Information
	  	45
			
	 Section 6.17
	  	 Correction of Defects
	  	45
			
	 Section 6.18
	  	 Protection Against Lien Claims
	  	45
			
	 Section 6.19
	  	 Approval of Easements
	  	46
			
	 Section 6.20
	  	 Signs
	  	47
		
	 ARTICLE 7        SALES AND RELEASES
	  	48
			
	 Section 7.1
	  	 Sales Agreements
	  	48
			
	 Section 7.2
	  	 Sales and Closings
	  	48
			
	 Section 7.3
	  	 Releases from Lien of Security Instrument
	  	49
		
	 ARTICLE 8        EVENTS OF DEFAULT AND REMEDIES
	  	51
			
	 Section 8.1
	  	 Events of Default
	  	51
			
	 Section 8.2
	  	 Remedies
	  	55
			
	 Section 8.3
	  	 Authorization to Apply Assets to Payment of Loan
	  	58
		
	 ARTICLE 9        MISCELLANEOUS
	  	59
			
	 Section 9.1
	  	 Successors and Assigns; No Assignment by Borrower
	  	59
			
	 Section 9.2
	  	 Notices
	  	59
			
	 Section 9.3
	  	 Borrower’s Representatives
	  	60
			
	 Section 9.4
	  	 Changes, Waivers, Discharge and Modifications in Writing
	  	61
			
	 Section 9.5
	  	 No Waiver; Remedies Cumulative
	  	61
			
	 Section 9.6
	  	 Costs, Expenses and Taxes
	  	62
			
	 Section 9.7
	  	 Disclaimer by Lender; No Joint Venture
	  	62

  

 iii 

					
	 Section 9.8
	  	 Indemnification
	  	63
			
	 Section 9.9
	  	 Consultants
	  	63
			
	 Section 9.10
	  	 Governing Law
	  	64
			
	 Section 9.11
	  	 Titles and Headings
	  	64
			
	 Section 9.12
	  	 Counterparts
	  	64
			
	 Section 9.13
	  	 Lender’s Rights with Respect to Loan
	  	64
			
	 Section 9.14
	  	 Confidentiality
	  	64
			
	 Section 9.15
	  	 Time is of the Essence
	  	64
			
	 Section 9.16
	  	 No Third Parties Benefited
	  	65
			
	 Section 9.17
	  	 Severability
	  	65
			
	 Section 9.18
	  	 Jurisdiction
	  	65
			
	 Section 9.19
	  	 Waiver of Jury Trial
	  	66
			
	 Section 9.20
	  	 Interpretation
	  	66
			
	 Section 9.21
	  	 Destruction of Note
	  	66
			
	 Section 9.22
	  	 Entire Agreement
	  	66
			
	 EXHIBIT A
	  	 CONDITIONS TO OBLIGATION OF LENDER TO MAKE THE LOAN
	  	A-1
			
	 EXHIBIT B
	  	 PROJECT UNDERWRITING DOCUMENTS
	  	B-1
			
	 EXHIBIT C
	  	 FORM OF DRAW REQUEST CERTIFICATION
	  	C-1
			
	 EXHIBIT D
	  	 CONSTRUCTION PROGRESS SCHEDULE
	  	D-1
			
	 EXHIBIT E
	  	 PROJECT BUDGET
	  	E-1
			
	 EXHIBIT F
	  	 FORM OF PHASE COMMITMENT
	  	F-1
			
	 EXHIBIT G
	  	 SCHEDULE OF MINIMUM REQUIRED PAYMENTS PER LOT/SCHEDULED RELEASE PRICE
	  	G-1
			
	 EXHIBIT H
	  	 PHASE DEPICTIONS
	  	H-1
			
	 EXHIBIT I
	  	 LYON REPRESENTATIVES
	  	I-1

  

 iv 

 LOAN AGREEMENT 
 THIS LOAN AGREEMENT (this “Loan Agreement”) is made as of January 30, 2007, by and between EAST GARRISON PARTNERS I, a California limited liability company
(“Borrower”), and RESIDENTIAL FUNDING COMPANY, LLC, a Delaware limited liability company (“Lender”). 
 RECITALS: 
 A. Borrower has applied to Lender for a revolving loan in the principal amount of $75,000,000 (the
“Loan”) to finance the acquisition and development of that certain residential housing community commonly known as East Garrison that Borrower anticipates undertaking. 
 B. Lender is willing to make the requested loan upon and subject to the terms and conditions set forth in this Loan Agreement. 
 AGREEMENT: 
 NOW, THEREFORE, in
consideration of the covenants and conditions herein contained, the parties agree as follows: 
  

 v 

 ARTICLE 1 LOAN SUMMARY; DEFINITIONS 
 Section 1.1 Loan Summary 
 The following is a summary of terms relating to the Loan and the
Project (each as hereinafter defined). In the event of any inconsistencies between the terms of this section and the remainder of this Loan Agreement, the terms of the remainder of this Loan Agreement will prevail. 
 (a) Project: East Garrison, consisting of 244.43 acres with an approved Vesting Tentative Map for 1,400 housing units to be built-out in three phases,
consisting of 420 affordable units and 980 market rate Homes and a Town Center with up to 75,000 square feet of commercial/retail/office uses located in Monterey County, California. The project will be developed to a finished lot/parcel condition.

 (b) Loan Amount: (i) Seventy-Five Million Dollars ($75,000,000) from January 30, 2007, through January 30, 2009,
(ii) Thirty-Five Million Dollars ($35,000,000) thereafter through January 30, 2010, (iii) Fifteen Million Dollars ($15,000,000) thereafter through the Maturity Date, and (iv) Zero Dollars ($0) thereafter, which amounts may be
adjusted pursuant to Section 2.9, provided that the Loan Amount may not at any time exceed Seventy-Five Million Dollars ($75,000,000). 
 (c) Development Work Commencement Date: not more than ninety (90) days after the date of this Agreement. 
 (d) Commitment Fee:
0.5% of the Loan Amount per annum, paid quarterly, as provided in Sections 1.2 and 2.4 below. 
 (e) Interest Rate: Prime Rate
+ 0.5%. Interest and fees will be calculated on the basis of a 365-day year counting the actual number of days occurring in the period for which the interest or fees are payable. 
 (f) Maturity Date: January 30, 2011. 
 (g) Advance Rate: 100% of the Qualified Project Expenditures; provided, however, that in no event (1) shall Lender advance more than $1,500,000 for the cost of acquiring the Land, (2) shall Lender be obligated to advance funds,
when aggregated, in excess of 60% of the sum of (i) the Value of that portion, if any, of the Project for which a Phase Commitment has been fully executed and delivered by the parties thereto, and (ii) the Value of that portion, if any, of
the Land for which a Phase Commitment has not been fully executed and delivered by the parties thereto, together with any improvements on or to such Land for which Lender advanced Loan proceeds that have been made or constructed by Borrower, or
(3) shall Borrower contribute to the Project less than Ten Million Two Hundred Thousand Dollars ($10,200,000) in equity. 
 (h)
Principal Repayment: See Section 2.8. 
 (i) Lot presale requirements for new Phase Commitment: 100% of Lots and other tracts of
real property in each Phase with respect to which Lender has disbursed Loan proceeds. 

 1 

 (j) A final Map as to Phase 1 shall be recorded no later than July 30, 2007. 
 Section 1.2 Certain Defined Terms 
 As used in this Loan Agreement (including any Exhibits attached to this Loan Agreement), the following terms have the meanings set forth below (unless expressly stated to the contrary): 
 “Advance Rate” has the meaning set forth in Section 1.1. 
 “Affiliate” means a Person that, directly or indirectly, controls, is controlled by, or is under common control with, a referenced Person. 
 “Agency” means the Redevelopment Agency of the County of Monterey. 
 “Anniversary Date” means, during the term of the Loan, each annual anniversary of the date of this Loan Agreement. 
 “Appraisal Report” means, with respect to the Project, a real estate appraisal report that (i) has been prepared by an Appraiser, (ii) at the time it is submitted to Lender is not
more than 3 months old, or was updated by letter or other written supplement not more than 3 months prior to the date of submission to Lender, (iii) states that it is prepared in accordance with the applicable standards of the American
Institute of Real Estate Appraisers for such reports, (iv) provides an appraisal of the Value of the Project and/or the Land or portion thereof required to be appraised, and (v) employs a customary methodology and provides limiting
conditions satisfactory to Lender in its reasonable discretion. 
 “Appraiser” means, with respect to the Project, a Person who is
qualified to appraise property similar in size and scope to the Project and which Person is acceptable to Lender in its reasonable discretion. 
 “Assignment” means that certain Assignment of Construction Agreements and Development Items dated as of even date herewith and executed by Borrower in favor of Lender, as the same may be amended or otherwise modified
from time to time. 
 “Borrower” means East Garrison Partners I, LLC, a California limited liability company. 
 “Budget” means the itemized budget for the Project with a listing of the allocation of budget items to each Phase (including an allocation to
each Phase of the costs already expended prior to the date of this Loan Agreement, including the cost of the Land), submitted to and approved by Lender and attached hereto as Exhibit E, as the budget may be amended in accordance with the
provisions of Section 6.10. 
 “Business Day” means any day on which Lender and the Federal Reserve Bank are legally open
for business. 
 “Change” means any material extra work not contemplated by the Plans and Specifications, the installation of
materially additional or different materials from those described in the Plans and 

  

 2 

 
Specifications, or any other material change in the Plans and Specifications. 
 “Commitment Fee” means an annual fee equal to 0.50% per annum of the Loan Amount (as determined by Lender on each Anniversary Date) that Borrower is required to pay to Lender during the
period from the date of this Loan Agreement through the Maturity Date, as set forth in Section 2.4. 
 “Construction
Agreements” means all agreements (including, without limitation, grading and construction contracts) entered into between Borrower and any contractor, architect, engineer, supplier or other Person with respect to the development or
construction of the Project, as those agreements may be amended or otherwise modified from time to time in accordance with this Loan Agreement. 
 “Construction Progress Schedule” means the schedule for the Development Work submitted to and approved by Lender and attached to this Loan Agreement as Exhibit D, as that schedule may be adjusted in accordance
with the provisions of this Loan Agreement. 
 “Debt” means, for any Person, the sum of the following: 
 (1) indebtedness for borrowed money; 
 (2) obligations evidenced by bonds, debentures, notes or other similar instruments; 
 (3)
obligations to pay the deferred purchase price of property or services; 
 (4) obligations as lessee under leases that have
been or should be, in accordance with GAAP, recorded as capital leases; 
 (5) obligations of the Person to purchase
securities (or other property) that arise out of or in connection with the sale of the same or substantially similar securities or property; 
 (6) obligations of the Person to reimburse any bank or other Person in respect of amounts actually paid under a letter of credit or similar instrument; 
 (7) indebtedness or obligations of others secured by a lien on any asset of the Person, whether or not such indebtedness or obligations
are assumed by the Person (to the extent of the value of the asset); 
 (8) obligations under guaranties in respect of, and
obligations (contingent or otherwise) to purchase or otherwise acquire, or otherwise to assure a creditor against loss in respect of, indebtedness or obligations of others of the kinds referred to in clauses (1) through (7) above;
and 
 (9) liabilities in respect of unfunded vested benefits under plans covered by Title IV of ERISA. 
  

 3 

 “Default Rate” means an annual rate equal to the Prime Rate plus 6.25%. 
 “Development Agreement” means that certain Development Agreement by and between the County of Monterey and Borrower dated as of October 4,
2005, with respect to the Land. 
 “Development Work” means the work of development to be performed on or with respect to the Land
(including, without limitation, the installation of utilities, roads and all related on-site and off-site improvements) in connection with the development of the Land into Finished Lots upon which construction of the Homes or other vertical
construction shall commence, all of which work and construction will be completed by or on behalf of Borrower in accordance with the Plans and Specifications, but will not include the Homes or any other vertical construction. 
 “Disposition and Development Agreement” means that certain Disposition and Development Agreement (Together with Exclusive Negotiation Rights to
Certain Property) by and between the Agency and Borrower dated as of October 4, 2005, with respect to the Land. 
 “Disposition and
Development Agreement Assignment” means that certain Assignment of Disposition and Development Agreement of even date herewith by Borrower in favor of Lender, as the same may be amended or otherwise modified from time to time.

 “Draw Request Certification” means, with respect to a requested disbursement of the Loan, a certification of Borrower delivered to
Lender substantially in the form of Exhibit C. 
 “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations and rulings issued thereunder. 
 “Environmental Indemnity” means, collectively, that
certain Hazardous Substances Remediation and Indemnification Agreement dated of even date herewith executed by Borrower in favor of Lender, as the same may be amended or otherwise modified from time to time, and that certain unsecured Hazardous
Substances Remediation and Indemnification Agreement dated as of the date hereof executed by Guarantor in favor of Lender, as the same may be amended or otherwise modified from time to time. 
 “Event of Default” means the occurrence, after any applicable grace period, of any of the events listed in Section 8.1. 

“FORA Loan” means the $4,100,000 loan made by the First National Bank to the Fort Ord Reuse Authority with respect to which approximately
$1,323,712 in interest payments is intended by the parties to be paid from Loan proceeds. 
 “Finished Lot” means a Lot on which the
Development Work is completed and as to which Borrower is entitled to receive a building permit for the construction of a Home or other vertical construction. 
 “General Lyon” means William Lyon, an individual. 
 “Incidental Take Permit” means that certain
permit issued in connection with the Project by the California Department of Fish and Game to East Garrison Partners, LLC. 
  

 4 

 “Force Majeure Event” means fire, flood, labor dispute, weather, governmental action or other
cause beyond the reasonable control of Borrower that delays the Development Work. 
 “GAAP” means generally accepted accounting
principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board, or if those boards
have not established principles regarding an accounting issue, then and only then, the principles set forth in any other statements by another entity approved by a significant segment of the accounting profession prevalent in the United States of
America. 
 “Gross Selling Price” means, with respect to a sold Lot or another tract of real property comprising the Land that has
been sold, the amount set forth in the Sales Agreement as the total amount to be paid to Borrower, including but not limited to, any earnest money or other deposit paid by the buyer, the base sales price for the Lot or tract plus any lot premium,
whether financed or collected at the close of the escrow, less any concessions given by Borrower. 
 “Guarantor” means, collectively,
Lyon and Woodman; all provisions contained in this Loan Agreement and pertaining to “Guarantor” are deemed to apply to each and every Person who is a Guarantor. 
 “Guaranty” means that certain Completion Guaranty dated of even date herewith executed by Guarantor in favor of Lender, as the same may be amended or otherwise modified from time to time.

 “Hazardous Materials” means the following: 
 (1) oil, flammable substances, explosives, radioactive materials, hazardous wastes or substances, toxic wastes or substances or any other
materials or pollutants, exposure to which is prohibited, limited or regulated by any governmental authority pursuant to any Hazardous Materials Law; 
 (2) asbestos in any form that is or could become friable, urea formaldehyde foam insulation, transformers or other equipment that contains dielectric fluid containing levels of polychlorinated biphenyls in excess of
50 parts per million, exposure to which is prohibited, limited or regulated by any governmental authority pursuant to any Hazardous Materials Law; 
 (3) chemical, material or substance defined as or included in the definition of “hazardous substances”, “hazardous wastes”, “hazardous materials”, “extremely hazardous waste”,
“restricted hazardous waste”, or “toxic substances” or words of similar import under any Hazardous Material Laws; 
 (4) any mold, mildew, fungi, spore, or organic or biological contaminant (or toxic byproduct of any of the preceding), or any other toxic substance (or byproduct thereof) resulting from condensation or moisture; and

  

 5 

 (5) any other chemical, material or substance, exposure to which is prohibited, limited
or regulated by any governmental authority pursuant to any Hazardous Materials Law. 
 “Hazardous Materials Claims” means any and all
enforcement, clean-up, removal or other governmental or regulatory actions or orders threatened, instituted or completed pursuant to any Hazardous Materials Laws, together with all claims made or threatened by any third party relating to damage,
contribution, cost recovery compensation, loss or injury resulting from any Hazardous Materials. 
 “Hazardous Materials Laws” means
any federal, state or local laws, ordinances and the regulations, policies or publications promulgated pursuant thereto relating to (i) the environment, (ii) health and safety, (iii) any Hazardous Materials (including, without
limitation, the use, handling, transportation, production, disposal, discharge or storage thereof), (iv) industrial hygiene or (v) environmental conditions on, under or about property, including, without limitation, soil and groundwater
conditions; including, but not limited to the following, as now or hereafter amended: 
 (1) Federal Statutes: the
Clean Air Act, 42 U.S.C. Section 7401, et seq.; the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. Section 9601, et seq., as amended by the Superfund Amendments and Reauthorization Act of 1986, 42
U.S.C. Section 11001, et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C. Section 1251, et seq.; the Hazardous Materials Transportation Act, as amended, 49 U.S.C. Section 1801, et seq.; the Resource Conservation
and Recovery Act, 42 U.S.C. Section 6901, et seq.; the Safe Drinking Water Act, 42 U.S.C. Sections 300f to 300j; the Solid Waste Disposal Act, 42 U.S.C. Section 3251, et seq.; and the Toxic Substances Control Act, 15 U.S.C.
Section 2601, et seq.; and 
 (2) California State Regulations: Sections 25115, 25117, 25122.7, 25140, 25249.8,
25281, 25316, 25501, and 25316 of the California Health and Safety Code; and Article 9 or Article 11 of Title 22 of the California Administrative Code, Division 4, Chapter 20. 
 “Homes” means the single family residences, condominium homes and/or attached townhouses that will be constructed by parties permitted under the Loan Documents, the Development Agreement and
the Disposition and Development Agreement in accordance with the Plans and Specifications, which structures will be constructed on the Finished Lots and offered for sale to individuals and families. 
 “Indemnified Party” means Lender and any Affiliate of Lender and any successors or assigns of Lender or any Affiliate and each of their officers,
directors, employees, agents, attorneys, consultants and advisors. 
 “Inspector” means the inspector(s) or engineer(s) engaged by
Lender, at the expense of Borrower, to provide to Lender consultation services in connection with the Project. 
 “Interest Due Date”
means the 15th calendar day of each month in which Lender has sent a 

  

 6 

 
statement of interest due pursuant to the terms of Section 2.6(b). 
 “Interest Rate” means the per annum Prime Rate plus 0.50%. 
 “Interest
Reserve” means the amount within the Budget that has been designated by Borrower and approved by Lender as available to pay the interest on the Loan, subject to Lender’s right to terminate such availability in accordance with the
provisions of Section 2.6(c) below. 
 “Land” means that certain real property that is suitable for and substantially
entitled for the construction of the Homes and other vertical construction thereon and related on and off-site improvements and upon which Borrower will perform in Phases the Development Work, as the real property is legally described in the
Security Instrument. 
 “Land Banking” means the practice of acquiring unimproved real property and not commencing the initial phase
of development of the real property within 6 months after the date of acquisition. 
 “Land Speculation” means the practice of
acquiring either (i) unimproved real property and reselling the real property without adding value by development of the real property, or (ii) real property for which a plat has not been obtained or which is not substantially entitled for
the development of a residential project. 
 “Laws and Regulations” means (i) all laws, regulations, orders, codes, ordinances,
rules, statutes and policies of all local, regional, county, state and federal governmental authorities having jurisdiction over a Project including, without limitation, all applicable zoning, subdivision, environmental protection, use and building
codes, laws, ordinances and regulations, and (ii) all restrictive covenants and other title encumbrances, permits and approvals, leases and other rental agreements that in any case relate to the development, occupancy, ownership, management,
use, and/or operation of the Project. 
 “Lender” means Residential Funding Company, LLC, a Delaware limited liability company, its
successors or assigns. 
 “Lender’s Escrow Instructions” means the escrow instructions issued by Lender, or Lender’s legal
counsel on behalf of Lender, to the Title Company and accepted in writing by the Title Company, specifying (i) the terms and conditions under which the Title Company may disburse the initial disbursement of the Loan for the Project;
(ii) Lender’s requirements with respect to the Title Policy; and (iii) any other matters that Lender or Lender’s legal counsel may deem necessary or appropriate. 
 “Lender’s Release Price” means, with respect to any parcel of the Land that Borrower requests Lender to release from the lien of the Security Instrument, the amount required to be paid to
Lender prior to the release, which amount equals, for each Lot located in the Project, the amount specified in Section 2.8(1). 
 “Loan” means the revolving loan described in this Loan Agreement in a principal amount not to exceed the Loan Amount. 
 “Loan Agreement” means this Loan Agreement, as the same may be amended or otherwise 

  

 7 

 
modified from time to time in accordance with the terms hereof. 
 “Loan Amount” means the “Loan Amount”, as set forth in the Loan Summary. 
 “Loan
Documents” means all documents, instruments, agreements, assignments and certificates relating to the Loan, including, without limitation, any and all loan or credit agreements, promissory notes, deeds of trust, mortgages, financing
statements, security agreements, assignments of rents, assignments of leases, assignments of contracts, environmental indemnities, guaranties, contractor’s consent agreements, construction agreements, plans and specifications, opinions of
counsel, evidences of authorization or incumbency, escrow instructions, and architect’s consent agreements to be executed (and acknowledged where applicable) by Borrower, Guarantor and/or Lender (where applicable), all in connection with Lender
making the Loan to Borrower as the same may be amended or otherwise modified from time to time in accordance with this Loan Agreement. The Loan Documents will include, but not be limited to, the following: 
 (1) this Loan Agreement; 
 (2) each Phase Commitment; 
 (3) the Note; 
 (4) the Guaranty; 
 (5) the Security Instrument; 
 (6) the Environmental Indemnity; 
 (7) the Assignment; 
 (8) the Disposition and Development Agreement Assignment; 
 (9) the Recognition Agreement; 
 (10) the UCC Financing Statement; 
 (11) the Construction Agreements; and 
 (12) the Plans and Specifications. 
 “Loan Summary” means the summary of certain terms of the Loan and certain requirements with respect to the Project set forth in
Section 1.1 above. 
 “Lots” means the tracts of real property within the Land comprising the Project that have been or
will be developed for the subsequent construction thereon of the Homes and other vertical construction. 
 “Lyon” means,
collectively, Lyon East Garrison and Lyon Homes. 
  

 8 

 “Lyon East Garrison” means Lyon East Garrison Company I, LLC, a California limited liability
company. 
 “Lyon Homes” means William Lyon Homes, Inc., a California corporation. 
 “Map” means a final subdivision or parcel map consistent with the Plans and Specifications and with the Laws and Regulations. 
 “Material Adverse Change” means any material and adverse change in, or a change that has a material adverse effect upon, any of: 
 (1) the business, properties, operations or condition (financial or otherwise) of Borrower or Guarantor such that, with the giving of
notice, the passage of time, or both, could reasonably be expected to result in either (i) Borrower or Lyon Homes failing to comply with any of the financial covenants contained in Section 5.5 or (ii) Borrower’s or
Guarantor’s inability to perform its or their respective obligations pursuant to the terms of the Loan Documents; or 
 (2) the legal or financial ability of Borrower or Guarantor to perform its or their respective obligations under the Loan Documents and to avoid any Potential Default or Event of Default; or 
 (3) the legality, validity, binding effect or enforceability against Borrower or Guarantor of any Loan Document. 
 “Maturity Date” means the first to occur of (i) the “Maturity Date,” as set forth in the Loan Summary, or (ii) the date on
which the Loan is required to be repaid pursuant to Section 8.2. 
 “Maximum Loan to Value Ratio” means seventy percent
(70%) of the sum of (i) the Value of that portion, if any, of the Project for which a Phase Commitment has been fully executed and delivered by the parties thereto, and (ii) the Value of that portion, if any, of the Land for which a
Phase Commitment has not been fully executed and delivered by the parties thereto, together with any improvements on or to such Land for which Lender advanced Loan proceeds that have been made or constructed by Borrower. 
 “Maximum Loan Amount” means (a) Five Million Seven Hundred Thousand Dollars ($5,700,000), with respect to issuance of the Phase Commitment
for Phase 2, and (b) Six Million Dollars ($6,000,000), with respect to issuance of the Phase Commitment for Phase 3. 
 “Net
Income” means, with respect to a calendar year, the after-tax net income of a Person on a consolidated basis for such calendar year determined in accordance with GAAP, before any extraordinary losses. 
 “Net Sales Proceeds” means, with respect to the sale of a Lot or other tract of real property comprising the Land, the Gross Selling Price, less
(x) an amount equal to any PAPA Payment required to be paid pursuant to the Disposition and Development Agreement, and (y) normal and customary commissions and closing costs paid to independent third parties, it being understood that
(i) any and all amounts otherwise payable to Borrower as the Gross Selling Price, including 

  

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but not limited to any deposit paid by the purchaser of the Lot or tract, will be proceeds required to be paid to Lender as a portion of the Net Sales
Proceeds, and (ii) until the Loan and all other obligations under the Loan Documents are repaid in full, in no event may any amounts be paid at the closing to Borrower or any Affiliate thereof. 
 “Net Worth” means that term as defined in accordance with GAAP. 
 “Non-Project” means any project or business activity of Borrower or Guarantor other than the Project. 
 “Note” means that certain Revolving Promissory Note dated as of even date herewith and executed by Borrower, as maker, and made payable to the order of Lender, as holder, in the amount of Seventy-Five Million Dollars
($75,000,000) and maturing on the Maturity Date, to evidence the Loan, as the same may be amended or otherwise modified from time to time. 
 “Operating Agreement” means that certain Operating Agreement for East Garrison Partners I, LLC dated January 21, 2003, as amended by that certain First Amendment to Operating Agreement for East Garrison Partners
I, LLC dated January 10, 2006, and by that certain Second Amendment to Operating Agreement for East Garrison Partners I, LLC dated May 8, 2006, as the same may be further amended or otherwise modified from time to time in compliance with
the terms of this Loan Agreement. 
 “PAPA Payment” means any “Participation Payment” Borrower is required to pay to the
Agency pursuant to Attachment No. 4 to the Disposition and Development Agreement, as such Participation Payments may be amended from time to time with approval of Lender. 
 “Permitted Exceptions” means (i) real estate taxes and assessments not yet due and payable and possible supplemental assessments for improvements constructed on the Land,
(ii) exceptions to title that are approved in writing by Lender (including such easements, dedications, covenants and other matters to which Lender consents, in writing after the date of this Loan Agreement), (iii) the exceptions set forth
in the Title Policy, and (iv) any liens against any portion of the Project that Borrower is contesting in accordance with the provisions of Section 6.18 below. 
 “Person” means an individual, partnership, corporation (including a business trust), limited liability company, joint stock company, trust, unincorporated association, joint venture or other
entity, or a government or any political subdivision or agency thereof. 
 “Phase” means that portion of the Project that will be
developed as a separate phase and for which the Budget has segregated the costs of the Development Work applicable to that Phase only, which Phases are identified as Phases 1 through 3 in the map attached hereto as Exhibit G, all of
which Phases total approximately 244.43 acres of Land, and each Phase to be approved for funding by the issuance of a Phase Commitment as provided for in Section 3.5. 
 “Phase 1” means that portion of the Land so designated on the Phase Map attached hereto as Exhibit H, as shall be further specified in the Phase Commitment for Phase 1 if and when
issued. 
 “Phase 2” means that portion of the Land so designated on the Phase Map attached hereto as Exhibit H, as shall be
further specified in the Phase Commitment for Phase 2 if and when issued. 
  

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 “Phase 3” means that portion of the Land so designated on the Phase Map attached hereto as
Exhibit H, as shall be further specified in the Phase Commitment for Phase 3 if and when issued. 
 “Phase Commitment” means a
Phase Commitment in substantially the form attached hereto as Exhibit F. 
 “Plans and Specifications” means the final
set of architectural, structural, mechanical, electrical, grading, sewer, water, street and utility plans and specifications for the Development Work to be included within the Project, including all supplements, amendments and modifications thereto
signed and affixed with the engineer’s and, if any, architect’s registration stamp or seal, all in form and substance reasonably satisfactory to Lender and the Inspector. 
 “Potential Default” means the existence of any event, which with the giving of notice, the passage of time, or both, would constitute an Event of Default hereunder or an event of default
(however described) under any other of the Loan Documents. 
 “Prepayment Price” means an amount equal to (i) the principal
amount of the Loan to be prepaid, as requested by Borrower, with no premium thereon, plus (ii) all accrued interest to the date of prepayment on the principal amount prepaid, plus (iii) all earned but unpaid fees and other charges
that are payable to Lender. 
 “Prime Rate” means the rate that is indicated in the Telerate as the prime lending rate announced from
time to time by JPMorgan Chase Bank, N.A., a national banking association, as in effect from time to time, it being understood that the Prime Rate is a reference rate and does not necessarily represent the lowest or best rate actually charged to any
customer. If the rate is no longer shown in the Telerate, Borrower and Lender will agree on a substitute source for determining the prime lending rate of JPMorgan Chase Bank, N.A. 
 “Project” means the acquisition and development project referred to in the Loan Summary and consisting of (i) the Land relating to each Phase and (ii) the Development Work to be
completed in Phases on the Land. 
 “Project Underwriting Documents” means the documents listed in Exhibit B and any other
documents relating to the Project that Lender requests, all in form and substance satisfactory to Lender. 
 “Qualified Project
Expenditures” means the costs for which proceeds of the Loan may be disbursed, which costs will be limited to the following: 
 (1) cost of acquiring the Land or the Lots; 
 (2) the cost of materials and labor in place
for the Project that are related to performance of the Development Work, but excluding any costs for materials delivered to the Land (i) that have not yet been put in place, or (ii) as to which Borrower does not have title; 
 (3) to the extent approved by Lender as to the Project, the normal and customary indirect costs and expenses related to the performance of
the Development 

  

 11 

 
Work, such as on-site supervision, temporary fencing, security, trailer rental, construction office supplies, temporary utilities, equipment rental,
messenger and postage costs; 
 (4) the costs of architectural, engineering and governmental fees related to the Project;

 (5) the Interest Reserve and Commitment Fee; 
 (6) the sales and marketing expenses (not to exceed 1.0% of the projected gross sales revenues for the Project); 
 (7) the general and administrative expenses (not to exceed 2.5% of the projected gross sales revenues for the Project); and 
 (8) any other item contained in the Budget and relating to the Project to the extent not expressly described or limited above. 

The particular amounts that may be disbursed for each of the categories set forth in paragraphs (1) through (7) above are limited to the amounts set
forth in the Budget for the Project. Amounts in the Budget that are not listed in any of the categories set forth in paragraphs (1) through (7) above will not be Qualified Project Expenditures and proceeds of the Loan may not be
disbursed for any such costs. 
 “Qualified Transferee” means a transferee that is (1) the executor of the estate of General
Lyon, (ii) a member of the immediate family of General Lyon, or (3) the trustee of a trust established and continuously maintained for the sole benefit of a member or members of the immediate family of General Lyon. 
 “Recognition Agreement” means that certain Consent, Subordination and Recognition Agreement dated on or about the date hereof by and among the
Agency, the County of Monterey, Borrower and Lender, as the same may be amended or otherwise modified from time to time. 
 “Regulatory
Approvals” means any permits, licenses, consents, approvals or authorizations (or withholding of objections), declarations by, or registrations or filings with, any governmental entity having jurisdiction and authority over the subject
matter with respect to which approval is sought. 
 “Rental Affordable Housing” means the rental affordable housing to be constructed
on Lots or other tracts of real property comprising the Land pursuant to the Disposition and Development Agreement. 
 “Right-of-Entry
License” means that certain Department of the Army Right-of-Entry letter dated May 12, 2006, issued in connection with the Project by Karen M. Fisbeck to Michael A. Houlemard, Jr. 
 “Sales Agreement” means, with respect to a Project, a written agreement for the sale of a Lot or other tract of real property comprising the Land
between Borrower and a Person (other than Lyon East Garrison, Woodman LLC or any of their respective Affiliates) who has been pre- 

  

 12 

 
qualified for the financing necessary to purchase the Lot or tract and who is a permitted transferee under the Disposition and Development Agreement, which
agreement must: 
 (1) be binding upon the purchaser; 
 (2) require the purchaser to deposit with Debtor an “at risk” deposit, provided that if the deposit is to be returned to the
purchaser if contingencies specified in the agreement are not satisfied (other than those allowed in clause (3) of this definition), then the deposit is not “at risk” until such contingencies have all been eliminated;

 (3) contain no contingencies to the obligation of the purchaser to purchase the applicable Lot or tract, other than
contingencies related to performance by Borrower; provided that if any contingency is not removed within 60 days of the date of the agreement, the agreement will no longer be considered a “Sales Agreement” for purposes of this Loan
Agreement; and 
 (4) conform to all applicable laws, regulations, codes and ordinances, including those requiring disclosures
to prospective and actual buyers. 
 “Scheduled Release Price” means the release prices designated on Exhibit G attached
hereto. 
 “Security Instrument” means that certain Construction Deed of Trust, Security Agreement and Fixture Filing with Assignment
of Rents, Proceeds and Agreements dated of even date herewith executed or to be executed by Borrower, as trustor, for the benefit of Lender, as the same may be amended or otherwise modified from time to time. 
 “Shortfall Loan” means the approximately $5,513,000 loan made by or on behalf of Borrower to the Agency to subsidize the construction of
approximately 196 units of Rental Affordable Housing if tax increment funds are not available for same. 
 “Soft Costs” means
Borrower’s overhead, general and administrative expenses, legal costs and expenses, costs and expenses of obtaining government approvals, planning costs and other “soft costs” incurred in the planning, acquisition, development,
marketing and sale of the Project. 
 “Tangible Net Worth” means the difference between (a) the tangible assets of a Person on a
consolidated basis as determined in accordance with GAAP, after deducting adequate reserves in each case where, in accordance with GAAP, a reserve is permitted, and (b) the Total Liabilities of such Person on a consolidated basis as determined
in accordance with GAAP; provided, however, in no event shall there be included as tangible assets, patents, trademarks, trade names, copyrights, licenses, goodwill, receivables from Affiliates, prepaid expenses, deposits, deferred loan costs or
other deferred charges, or treasury stock or any securities or indebtedness of such Person, or any securities unless such securities are readily marketable on a public exchange in the United States of America. 
 “Title Insurance Company” means First American Title Insurance Company or other title insurance company acceptable to Lender. 
 “Title Policy” means, with respect to the Project, that certain policy of title insurance accepted 

  

 13 

 
by Lender for the Project, which policy of title insurance must: 
 (1) be an ALTA loan form (10-17-92 or the equivalent thereof) title insurance policy; 
 (2) be issued in the amount specified by Lender in Lender’s Escrow Instructions; 
 (3) be issued by the Title Insurance Company; 
 (4) insure Lender that the Security Instrument is an enforceable lien against marketable fee simple title to the Project, subject only to
Permitted Exceptions; 
 (5) provide mechanics’ lien coverage; 
 (6) have all standard exceptions deleted; and 
 (7) have appended thereto the following endorsements: 
 (A) a CLTA Form 100/ALTA Form 9 comprehensive endorsement; 
 (B) a usury endorsement; 
 (C) a CLTA Form 111.11 revolving loan credit endorsement; 
 (D) an ALTA Form 6 variable rate
endorsement; 
 (E) an ALTA Form 8.1 environmental lien endorsement; 
 (F) an endorsement deleting the creditors’ rights exclusion; 
 (G) an endorsement deleting the arbitration provision; and 
 any other endorsements as set forth in Lender’s Escrow Instructions or as Lender otherwise requires with respect to the Project. 
 “Total Liabilities” means the aggregate amount of all liabilities of a Person reported on a consolidated basis as computed in accordance with GAAP. 
 “Town Center” means the commercial, retail and/or office complex of up to 75,000 square feet Woodman or an Affiliate thereof intends to construct
on a tract of real property comprising the Land pursuant to the Disposition and Development Agreement. 
 “Transfer” means, with
respect to the Project, Borrower and/or Guarantor, the occurrence of any of the following: 
 (1) any sale, conveyance,
assignment, transfer, lease, alienation, mortgage, conveyance of security title, encumbrance or other disposition of any kind of the Project, or any portion thereof, or any agreement to do any of the foregoing, or any other 

  

 14 

 
transaction the result of which is, directly or indirectly, to divest Borrower of any portion of its title to or interest in the Project, voluntarily or
involuntarily, other than transfers and sales of the Lots in the ordinary course of business, it being the express intention of Borrower and Lender that Borrower is prohibited from granting to any Person a lien or encumbrance upon the Project (other
than Permitted Exceptions), regardless of whether the lien is senior or subordinate to Lender’s lien; 
 (2) any sale,
conveyance, assignment, transfer, alienation, mortgage, conveyance of security title, encumbrance or other disposition or other type of preferential arrangement of any kind of any other collateral for the Loan (including personal property
collateral), or any other transaction the result of which is, directly or indirectly, to divest Borrower or Guarantor of any portion of its title to or interest in the collateral, voluntarily or involuntarily, other than in connection with transfers
and sales of Lots in the ordinary course of business, it being the express intention of Borrower, Guarantor and Lender that Borrower and Guarantor are each prohibited from granting to any Person a lien or encumbrance upon the other collateral,
regardless of whether the lien is senior or subordinate to Lender’s lien; 
 (3) any merger, consolidation or dissolution
involving Borrower or Lyon; 
 (4) the sale, lease, transfer or other disposition of a majority of the assets of Borrower or
Lyon; 
 (5) the transfer of fifty percent (50%) or more of the voting stock of Lyon Homes or any other transfer of the
voting stock of Lyon Homes if after such transfer General Lyon, William H. Lyon and/or a Qualified Transferee, in the aggregate, do not (i) control Lyon Homes, and (ii) own more than fifty percent (50%) of the voting stock of Lyon
Homes; 
 (6) the transfer of fifty percent (50%) or more of the voting stock of any corporation that is the direct or
indirect owner of fifty percent (50%) or more of the voting stock of Lyon Homes or any other transfer of the voting stock of Lyon Homes if after such transfer General Lyon, William H. Lyon and/or a Qualified Transferee, in the aggregate, do not
(i) control Lyon Homes, and (ii) own more than fifty percent (50%) of the voting stock of Lyon Homes; 
 (7)
the transfer of fifty percent (50%) or more of any partnership interest in any partnership that is the direct or indirect owner of fifty percent (50%) or more of the voting stock of Lyon Homes, or any other transfer of the voting stock of
Lyon Homes if after such transfer General Lyon, William H. Lyon and/or a Qualified Transferee, in the aggregate, do not (i) control Lyon Homes, and (ii) own more than fifty percent (50%) of the voting stock of Lyon Homes; or

 (8) the transfer of fifty percent (50%) or more of any membership interest in any limited liability company that is
the direct or indirect owner of fifty percent (50%) or more of the voting stock of Lyon Homes, or any other transfer of the voting stock of Lyon Homes if after such transfer General Lyon, William H. Lyon and/or a Qualified 

  

 15 

 
Transferee, in the aggregate, do not (i) control Lyon Homes, and (ii) own more than fifty percent (50%) of the voting stock of Lyon Homes;

 (9) any merger, consolidation or dissolution involving Borrower, Lyon Homes or any co-managing member of Borrower or any
sole member or managing member of such co-managing member; provided, however, that it shall not be a Transfer hereunder if such co-managing member or sole member or managing member is Woodman LLC or Woodman Inc. or a replacement thereof and is
replaced within thirty (30) days of such merger, consolidation or dissolution by a co-managing member, sole member or managing member, as applicable, reasonably satisfactory to Lender; 
 (10) the sale or transfer of a majority of the assets of Lyon East Garrison; 
 (11) the transfer of any managing member interest in Borrower to any Person other than Lyon East Garrison; 
 (12) with respect to any managing member of Borrower that is a corporation, the transfer of any portion of the voting stock of the
managing member to any Person other than Lyon East Garrison; 
 (13) with respect to any managing member of Borrower that is a
general partnership or limited partnership, the transfer of any partnership interest of the general partner to any Person other than Lyon East Garrison; 
 (14) with respect to any managing member of Borrower that is a limited liability company, the transfer of any membership interest of the managing member to any Person other than Lyon East Garrison; 
 (15) the conversion of any interest in Lyon East Garrison to a non-managing member interest; 
 (16) the addition of any managing member or member other than Lyon East Garrison; 
 (17) Lyon East Garrison shall be owned in whole or in part or controlled by any Person other than Lyon Homes; or 
 (18) Lyon East Garrison shall cease to be a managing member of Borrower. 
 “UCC Financing Statement” means any UCC financing statement, whether executed or not by Borrower, naming Borrower as debtor, in favor of Lender, as secured party, in connection with Lender
making proceeds of the Loan available to Borrower for the Project, as such UCC financing statement may be amended or otherwise modified from time to time with or without Borrower’s signature. 
 “Value” means the value that an Appraiser assigns to the Project or any part thereof as to which a value is being determined, as set forth in an
Appraisal Report and based upon the following: 
  

 16 

 (1) the value of all portions of the Land that, as of the date of determination of Value,
have not yet been approved as a Phase, will be determined based on the “as is” value of the Land; and 
 (2) the
value of each Phase, if any, of the Project that, as of the date of determination of Value, has been approved as a Phase, will be determined based on the lesser of (i) the gross sales proceeds for such Phase or portion thereof in an executed
Sales Agreement for such Phase or portion thereof, or (ii) the retail value of such Phase or portion thereof after completion of all Development Work necessary to develop the Lots in such Phase or portion thereof into Finished Lots. 

“William H. Lyon” means William H. Lyon, the son of General Lyon. 
 “Woodman” means, collectively, John K. Anderson, individually and with Lois A. Anderson, as co-trustees of The Anderson Family Trust dated February 28, 2001; William A. Silva, individually
and with Krisanta K. L. Silva, as co-trustees of The Silva Family Trust dated April 7, 2000, Marilyn J. Silva, individually and as sole trustee of The Marilyn J. Silva Living Trust dated April 22, 1991, Woodman LLC and Woodman Inc.

 “Woodman Inc.” means Woodman Development Company, Inc., a California corporation. 
 “Woodman LLC” means Woodman Development Company, LLC, a California limited liability company. 
 Section 1.3 Other Definitional Provisions 
 (a) Accounting terms not defined herein will have the respective meanings given to them under GAAP. To the extent that the definitions of accounting terms herein are inconsistent with the meanings of those terms under
GAAP, the definitions contained herein will control. 
 (b) The words “hereof”, “herein” and “hereunder” and
words of similar import when used in this Loan Agreement will refer to this Loan Agreement as a whole and not to any particular provision of this Loan Agreement. 
 (c) In this Loan Agreement in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and
“until” each means “to but excluding”. 
  

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 ARTICLE 2 THE LOAN 
 Section 2.1 Agreement to Lend and Borrow 
 Lender agrees, on the terms and conditions hereinafter
set forth, to make the Loan to Borrower for the purpose of providing financing for the Project. Borrower will repay the Loan pursuant to Section 2.8, may prepay the Loan pursuant to Section 2.10 and may reborrow proceeds of
the Loan pursuant to this Section 2.1(a) and Section 2.12. 
 The outstanding principal balance of the Loan,
together with accrued and unpaid interest thereon and all other amounts payable by Borrower under the terms of the Loan Documents, will be due and payable on the earlier of: (i) the date on which the Loan is required to be paid pursuant to
Section 8.2 below, or (ii) the Maturity Date. 
 Section 2.2 Evidence of Indebtedness 
 Concurrent with the execution and delivery of this Loan Agreement, Borrower will execute and deliver to Lender the Note, evidencing the indebtedness
incurred by Borrower pursuant to the terms of this Loan Agreement. 
 Section 2.3 Use of Disbursements 
 Borrower will ensure the use of disbursements of the Loan only for Qualified Project Expenditures. 
 Section 2.4 Commitment Fee 
 (a)
During the period from the date of this Loan Agreement until the Maturity Date, the Commitment Fee will be an annual fee determined in advance for the applicable annual period, although Borrower may pay the annual fee in quarterly installments.
Borrower acknowledges that Lender’s agreement to allow the Commitment Fee to be paid in quarterly installments does not alter the nature of the Commitment Fee from being an annual fee, payable in advance for each annual period. 
 (b) The Commitment Fees will be paid as follows: 
 (1) initial quarterly installment of the first annual Commitment Fee will be paid upon execution and delivery of this Loan Agreement; 
 (2) subsequent quarterly installments of the annual Commitment Fee will be paid on April 30, July 30, October 30
and January 30 of each year, commencing on April 30, 2007; and 
 (3) notwithstanding any decrease in the Loan
Amount that may occur during the annual period with respect to which the Commitment Fee is payable, Borrower will continue to pay quarterly installments based on the Loan Amount at the beginning of the period, and the Commitment Fee payable will be
adjusted at the beginning of the next annual period for which the Commitment Fee is payable. 
  

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 (c) If Borrower fails to pay any Commitment Fee as required under this Section 2.4 in a
timely manner, Borrower hereby authorizes Lender to disburse to itself proceeds of the Loan to pay the Commitment Fee. Lender in its sole discretion (but without any obligation to do so) may make such disbursements notwithstanding the existence of
an Event of Default or Potential Default. Such disbursements will be added to the outstanding principal balance of the Loan. The authorization hereby granted is irrevocable, and no further direction or authorization from Borrower is necessary for
Lender to make such disbursements. If Lender disburses to itself Loan proceeds to pay itself a Commitment Fee without first having received a request from Borrower to make such a disbursement, then Lender will send to Borrower a statement that shows
the amount of Loan proceeds disbursed to pay the Commitment Fee and an explanation of Lender’s calculation of the amount thereof. 
 Section 2.5 No Reduction in Commitment Fee 
 Borrower acknowledges that the Commitment Fee required to be paid to Lender
pursuant to the provisions of Section 2.4 will be due and owing to Lender in advance for each annual period regardless of whether the Loan remains outstanding for the entire annual period and regardless of whether the Loan Amount
decreases or is paid in its entirety during the annual period. If either Borrower repays or is required to repay the Loan prior to the end of an annual period as to which Borrower has not paid the entire Commitment Fee, simultaneous with the final
payment on the Loan Borrower will pay to Lender the remaining installments of the Commitment Fee due and owing with respect to the annual period. Upon the payment in full prior to the end of an annual period for which Commitment Fee is payable, or
if the Loan Amount decreases prior to the end of the annual period, in either event, Borrower will not be entitled to any refund of the Commitment Fee previously paid. Upon termination of this Loan Agreement, no additional Commitment Fee will
thereafter be due to Lender. 
 Section 2.6 Interest 
 (a) The Loan will bear interest from the date of disbursement hereunder on the unpaid principal at an annual rate equal to the Interest Rate. 

(b) On or before the 5th Business Day of each month, commencing with the first month after Lender has disbursed proceeds of the Loan, Lender will send
to Borrower a statement setting forth the amount of interest due for the previous month. Borrower will pay the interest due for the previous month on or before the Interest Due Date, except if the Budget for the Project includes an Interest Reserve
then, subject to the limitations and restrictions on payment from the Interest Reserve contained in this Loan Agreement, Borrower may direct Lender to, and Lender will, make a disbursement of the Loan to pay itself the interest due on the Loan with
respect to the Project until the Interest Reserve is fully disbursed, upon and subject to the terms and conditions contained herein. 
 (c)
Borrower hereby authorizes and instructs Lender to disburse proceeds of the Loan to pay interest accrued on the Loan in accordance with the Interest Reserve provisions set forth in the Budget, notwithstanding that Borrower may not have requested a
disbursement of that amount. The authorization and instructions hereby granted shall be irrevocable and no further direction or authorization from Borrower shall be necessary for Lender to make such 

  

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disbursements. Notwithstanding the foregoing provisions to the contrary: (i) if the Development Work is six (6) months or more behind the schedule
as shown on the Construction Progress Schedule, then at Lender’s option Borrower will be required to pay interest on the Loan from its own funds until the progress on the Development Work is at or ahead of the schedule as shown on the
Construction Progress Schedule; or (ii) if the cumulative sales of the Lots on or after the date that is 6 months from the date Lots are scheduled to be offered for sale as shown in the Construction Progress Schedule is 33% or more below the
projected cumulative sales of Lots as of that date, then at Lender’s option, Borrower will be required to pay interest on the Loan from its own funds until the cumulative sales of the Lots meets of exceeds the number of sales as projected in
the Construction Progress Schedule as of that date. Thereafter, the Interest Reserve will be re-established and will remain available to pay interest for so long as sales of the Lots equal or exceed the criteria specified above or until it is
exhausted. 
 Section 2.7 Interest Rate Limitation 
 The provisions of this Loan Agreement and the other Loan Documents are hereby expressly limited so that in no contingency or event will the amount paid or agreed to be paid to Lender for the use, forbearance or
detention of the sums evidenced by this Loan Agreement exceed the maximum amount permissible under applicable law. If from any circumstance whatever the performance or fulfillment of any provision of this Loan Agreement or of any other Loan Document
should involve or purport to require any payment in excess of the limit prescribed by law, then the obligation to be performed or fulfilled is hereby reduced to the limit prescribed by law. In addition, if, from any circumstance whatever, Lender
should ever receive as interest an amount that would exceed the highest lawful rate under applicable law, then the amount that would be excessive interest will be applied as an optional reduction of principal in accordance with the terms of
Section 2.9 (or, at Lender’s option, be paid over to Borrower), and will not be counted as interest. 
 Section 2.8
Repayment of Principal 
 Principal of the Loan will be due and payable as follows: 
 (1) Upon the sale of a Lot or other tract of real property comprising the Land (other than Lots or tracts on which only Rental Affordable
Housing or the Town Center is to be constructed), Borrower will repay to Lender (x) the greater of (i) the Scheduled Release Price as shown on Exhibit G attached hereto, or (ii) an amount equal to 100% of the Net Sales
Proceeds, plus (y) any and all past due payments of principal, interest or fees owed to Lender pursuant to the terms of the Loan Documents. 
 (2) If at any time the outstanding principal balance of the Loan shall exceed the Maximum Loan to Value Ratio, Borrower shall promptly prepay the principal balance of the Loan to the extent necessary to comply with
said ratio. 
 (3) If at any time the outstanding principal balance of the Loan shall exceed the Loan Amount then in effect,
Borrower shall promptly prepay the principal balance of the Loan to the extent of such excess. 
  

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 (4) Upon receipt of any reimbursement or payment from any Person, including, without
limitation, in connection with (i) the Shortfall Loan, FORA Loan or any other repayment by any Governmental Authority or any other Person of any loan, note, subsidy or other benefit extended to or on behalf of such Person, (ii) any
insurance policies, and (iii) reimbursement from the proceeds of bonds issued by any improvement district, community facilities district, special assessment district, Mello-Roos district or similar district or any other municipal utility,
levee, water improvement or similar district with respect to the Project, Borrower shall immediately make a principal payment of the Loan in an amount equal to one hundred percent (100%) of any such reimbursement, which amount shall be applied
by Lender upon its receipt by Lender to the outstanding principal amount of the Loan. 
 (5) On the Maturity Date, Borrower
will repay the entire remaining principal amount of the Loan. 
 Section 2.9 Prepayment of the Loan 
 Borrower will have the right to prepay the Loan at any time, in full or in part at a price equal to the Prepayment Price. Any partial prepayment of the
Loan must be accompanied by a written statement wherein Borrower specifies the particular categories within the Budget or the particular Lots to which the prepayment is to be applied, provided that if any such prepayment is accompanied by a request
for a partial release of the Security Instrument, the release will be in accordance with the provisions of Section 7.5. 
 Section 2.10 Payments 
 (a) All payments of principal, interest and fees on the Loan will be deemed received on the date
the funds are received in Lender’s bank account (if the payment is made by wire or other electronic funds transfer), or on the first business day after receipt by Lender at the address set forth below for the giving of notices to Lender or at
any other address as Lender may designate from time to time for delivery of payments (if payment is made other by wire or other electronic funds transfer). 
 (b) If any payment of principal, interest or fees to be made by Borrower becomes due on a day other than a Business Day, the payment will be deemed due on the next succeeding Business Day and the extension of time
will be included in computing any interest with respect to the payment. 
 (c) Throughout the term of the Loan, interest and fees will be
calculated as set forth in Section 1.1. 
 Section 2.11 Applications of Payments; Late Charges and Default Rate

 (a) Payments received by Lender pursuant to the terms hereof will be applied in the following manner: 
  

 21 

 (1) first, to the payment of all expenses, charges, costs and fees incurred by or payable
to Lender and for which Borrower is obligated pursuant to the terms of the Loan Documents; 
 (2) second, to the payment of
all interest accrued to the date of payment, except that the payments made pursuant to Section 2.8(1) through (4) will be applied to the payment of principal and not to the payment of interest; and 
 (3) third, to the payment of principal. 
 Notwithstanding anything to the contrary contained herein, after the occurrence and during the continuation of an Event of Default, all amounts received by Lender from any party will be applied in any order that
Lender, in its sole discretion, may elect. 
 (b) If any installment of interest and/or the payment of principal is not received by Lender
within 5 Business Days after the due date thereof, then in addition to the remedies conferred upon Lender pursuant to Section 8.2 hereof and the other Loan Documents, Lender may elect to assess a late charge of 4% of the amount of the
installment due and unpaid, which late charge will be added to the delinquent amount to compensate Lender for the expense of handling the delinquency. Borrower and Lender agree that the late charge represents a good faith and fair and reasonable
estimate of the probable cost to Lender of the delinquency. Borrower acknowledges that during the time that any such amount is in default, Lender will incur losses that are impracticable, costly and inconvenient to ascertain and that the late charge
represents a reasonable sum considering all of the circumstances existing on the date of the execution of this Loan Agreement and represents a reasonable estimate of the losses Lender will incur by reason of late payment. Borrower further agrees
that proof of actual losses would be costly, inconvenient, impracticable and extremely difficult to fix. Acceptance of the late charge will not constitute a waiver of the default with respect to the overdue installment, and will not prevent Lender
from exercising any of the other rights and remedies available hereunder. 
 (c) Upon the occurrence of an Event of Default (and so long as
the Event of Default continues), the entire balance of principal of the Loan, together with all accrued interest thereon, will bear interest at the Default Rate. 
 Section 2.12 Revolving Nature of Loan 
 The Loan is a revolving loan and any amounts borrowed to
fund the cost of the Development Work, once repaid may be redrawn, subject to the terms of the Loan Documents restricting disbursement of proceeds of the Loan. 
 Section 2.13 Security 
 Payment of the Loan by Borrower and performance of Borrower’s other
obligations under the Loan Documents will be secured by the collateral described in the Security Instrument. Borrower warrants that the Security Instrument will create a valid and first-lien position with respect to the Project, subject only to the
Permitted Exceptions. 
  

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 ARTICLE 3 DISBURSEMENTS OF THE LOAN 
 Section 3.1 Closing 
 Closing and initial disbursement of the Loan are subject to Borrower’s
satisfaction of all requirements set forth in attached Exhibit A. 
 Section 3.2 Conditions to Disbursement

 The obligation of Lender to make any disbursement requested by Borrower of proceeds of the Loan is subject to fulfillment of all of the
following conditions precedent: 
 (1) No Event of Default or Potential Default has occurred and is continuing, or would
result from such disbursements or from the application of the proceeds therefrom. 
 (2) All requests for disbursements of
proceeds of the Loan must comply with the terms of this Section 3.2 and any additional limitations set forth in the Loan Summary. Disbursements will be available twice per month. 
 (3) Each disbursement request must be evidenced by a Draw Request Certification and must be accompanied by the following: 
 (A) written summary prepared by Borrower, in detail acceptable to Lender, of the billings of each contractor, subcontractor or vendor with
respect to the Development Work for which a disbursement is being requested, together with, if requested by Lender, copies of the billings of each such subcontractor or vendor and, if requested by Lender, appropriate lien waivers from each
contractor, subcontractor and vendor to be paid; 
 (B) a written certification from the Inspector to Lender, in a form
satisfactory to Lender, that (i) the portion of the Development Work for which payment is being sought has been completed and (ii) all Development Work done for which payment is being sought has been completed with new materials and
fixtures, or refurbished materials and fixtures of the appropriate quality and condition to meet the requirements of the Plans and Specifications, and in a good and workerlike manner; 
 (C) such other documents (if any) specified in the Loan Summary or as may be requested by Lender. 
 (4) The requested disbursement of proceeds of the Loan will not exceed the applicable Advance Rate. 
 (5) Following the requested disbursement of proceeds of the Loan, the outstanding principal amount of the Loan will not exceed the Loan Amount.

  

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 (6) The Project complies with all requirements set forth in the Project Summary and the
other Loan Documents. 
 (7) The proceeds of the Loan that remain available for disbursement for the Development Work for
which a Phase Commitment has been issued are sufficient to complete such Development Work; provided, however, that Lender will nevertheless be obligated to make a disbursement in the event of a deficiency, provided (i) the Budget and the amount
of the Loan available for disbursement have been increased by an amount at least equal to such deficiency in accordance with the terms of Section 6.10(d), or (ii) Borrower provides to Lender evidence that it has paid from its own
funds, in addition to any Borrower funds that the Budget for the Project requires, an amount at least equal to the amount of the deficiency. 
 (8) All costs requested to be funded from the proceeds of the disbursement relate to costs that are Qualified Project Expenditures. 
 (9) No liens (other than liens constituting Permitted Exceptions) have been filed against the Project, except as permitted by
Section 6.18. 
 (10) All statements made in the applicable Draw Request Certification are true and correct on and
as of the date of the requested disbursement, before and after giving effect thereto and to the application of the proceeds therefrom. 
 (11) The representations and warranties of Borrower and Guarantor contained in the Loan Documents are true and correct in all material respects on and as of the date of the requested disbursement, before and after
giving effect thereto and to the application of the proceeds therefrom, as though made on and as of such date. 
 (12) At
Lender’s request, Lender is provided, at Borrower’s expense, with a “date down” endorsement to the Title Policy insuring that there are no liens imposed by law for services, labor or materials appearing in the public records, and
insuring the full amount of the disbursement in the form approved by Lender, provided that any such endorsement may show mechanics’ liens resulting from the Development Work if and only if the Title Company will issue an endorsement that
insures Lender against any loss by reason of such mechanics’ liens and Borrower has complied in all respects with the requirements of Section 6.18. 
 (13) With respect to any disbursement of Loan proceeds to fund any portion of the payment of the FORA Loan or the Shortfall Loan, Lender
has been delivered documentation satisfactory to Lender assigning to Lender the right to receive all prepayments, repayments and reimbursements for the applicable loan. 
 The foregoing submissions must reflect the cost of all Development Work for which payment is to be made. The Draw Request Certification must specify the portion of such costs that will be paid out of the requested
disbursement of Loan proceeds, and, if any portion of such costs are to be paid by Borrower, the portion of such costs to be paid by Borrower. 
 Provided
that no Event of Default or Potential Default exists, and subject to the terms and 

  

 24 

 
conditions set forth herein, Lender will use its reasonable best efforts to disburse the amount requested within 5 Business Days after receipt of a Draw
Request Certification meeting the requirements of this Loan Agreement. If Lender is unable to make the disbursement within that time period, Lender will disburse the proceeds of the Loan as soon thereafter as reasonably possible. All disbursements
will be delivered by federal funds wire transfer as instructed by Borrower. 
 Lender’s right to require satisfaction of each of the foregoing
conditions and to receive and review the materials listed above will not impose upon Lender any obligation whatsoever to Borrower, any general contractor, any architect, any purchasers of the Lots or any other party whatsoever with respect to any of
the subject matter constituting such conditions, nor will it operate to release Borrower from liability for any misrepresentations or breaches pursuant to this Loan Agreement (notwithstanding any opportunity of Lender to discover such
misrepresentation or breach from materials provided to Lender as a condition of closing). Borrower understands and agrees that such conditions are for the sole purpose of protecting Lender’s Loan advances and providing security for the Loan and
are made solely for Lender’s benefit. No waiver of a condition in one or more instances will establish a course of dealing or other agreement that will bind Lender or prohibit Lender from enforcing such condition or any other term or condition
of this Loan Agreement in the same or any other instance. 
 Section 3.3 Application of Disbursements 
 (a) All Loan proceeds disbursed to Borrower will be used only for payment of those items specified in the Draw Request Certification for which the
particular disbursement was made; provided, however, that Borrower may reimburse itself from Loan proceeds for Qualified Project Expenditures contained in the Budget that were previously paid by Borrower. Borrower will not use any such disbursement
to pay or reimburse itself, directly or indirectly, for any amounts paid by Borrower or any other Person but not included in the Budget. 
 (b) Borrower will not permit the use of Loan proceeds for Land Banking or Land Speculation. 
 (c) Borrower will not use any part of
the proceeds of the Loan to (i) purchase or carry any margin stock (within the meaning of Regulation U issued by the Board of Governors of the Federal Reserve System), (ii) repay or otherwise refinance indebtedness of Borrower or others
incurred to purchase or carry any margin stock, (iii) extend credit for the purpose of purchasing or carrying any margin stock, or (iv) acquire any security in any transaction that is subject to Section 13 or 14 of the Securities
Exchange Act of 1934, as amended, and regulations promulgated thereunder. 
 Section 3.4 Disbursements Notwithstanding Noncompliance

 Notwithstanding the failure of any condition precedent to Lender’s obligation to make any disbursement hereunder, Lender may make
the disbursement if Lender, in its sole and absolute discretion, determines the making of the same to be advisable, and any such disbursement (whether obligatory or non-obligatory) will be secured by the Security Instrument. The making of any
disbursement, either before or after the satisfaction of all conditions 

  

 25 

 
precedent with respect to Lender’s obligation to make the same will not be deemed to constitute an approval or acceptance by Lender of the Development
Work theretofore completed or a waiver of the condition with respect to a subsequent disbursement. 
 Section 3.5 Commencement of
Development Work in Phases 
 To obtain the consent of Lender to funding of a new Phase of the Project, Borrower must submit to Lender a
request to commence the new Phase along with: 
 (1) a final, recorded Map showing the proposed Phase and the Finished Lots to
be created therein; provided, however, that Borrower shall have until no later than July 30, 2007, to record a final Map that covers all of Phase 1; 
 (2) the then current Budget for the Phase, which Budget must include any off-site Development Work that must be performed in connection with the Phase, showing any changes from the previously submitted Budget, or a
certificate that there have been no changes to the Budget for the Phase from what has previously been approved by Lender, and if there has been a change in the Budget, Borrower will request an approval of the change to the Budget and provide any
other information as specified in Section 6.10 below for an amendment to the Budget; 
 (3) evidence that Borrower
has sufficient funds to pay the balance of the costs for the proposed Development Work that under the Budget will not be funded by the Loan; 
 (4) evidence that the Development Agreement and the Disposition and Development Agreement remain in full force and effect without default thereunder; and 
 (5) an Appraisal, if required by Lender. 
 Upon receipt of the items required in this Section 3.5 and all Project Underwriting Documents regarding the Phase, all of which items and documents shall be in form and substance satisfactory to Lender,
and provided (a) there are no Events of Default or Potential Defaults, (b) in the reasonable opinion of Lender, Borrower has sufficient funds to pay the balance of the costs for the proposed Development Work, and (c) the Loan Amount
is no more than the Maximum Loan Amount, then Lender will issue a Phase Commitment in substantially the same form as attached hereto as Exhibit F setting forth the scope of the Phase and any adjustments to the Loan terms applicable to
the Phase, including if necessary any adjustment to the Scheduled Release Price set forth in Exhibit G. Notwithstanding any other provision contained in this Loan Agreement, Lender will not be required to fund any portion of the Loan in
connection with a proposed Phase until the Phase Commitment has been executed and delivered by Borrower and Lender. 
  

 26 

 ARTICLE 4 REPRESENTATIONS AND WARRANTIES 
 Section 4.1 Consideration 
 As an
inducement to Lender to execute this Loan Agreement, make the Loan and disburse the proceeds of the Loan, Borrower represents and warrants to Lender the truth and accuracy of the matters set forth in this Article 4. 
 Section 4.2 Organization 
 Each
of Borrower and Guarantor is duly organized, validly existing and in good standing under the laws of its state of organization, is duly qualified to do business and is in good standing in every jurisdiction where its business or properties require
qualification. Each of Borrower and Guarantor has all requisite power and authority to own and operate its properties and to carry on its business as now conducted or proposed to be conducted. 
 Section 4.3 Authorization 
 The
execution, delivery and performance by Borrower of the Loan Documents have been duly authorized by all necessary action and do not and will not (i) contravene the Articles of Organization of Borrower or the Operating Agreement,
(ii) contravene any law, rule or regulation or any order, writ, judgment, injunction or decree or, in any material respect, any contractual restriction binding on or affecting Borrower or Guarantor, (iii) require any approval or consent of
any member, partner, shareholder or any other Person, other than approvals or consents that have been previously obtained and disclosed in writing to Lender, (iv) result in a breach of or constitute a default under any indenture or loan or
credit agreement or any other agreement, lease or instrument to which Borrower or Guarantor is a party or by which Borrower or Guarantor or their respective properties may be bound or affected, or (v) result in, or require the creation or
imposition of, any lien of any nature (other than the liens contemplated hereby) upon or with respect to any of the properties now owned or hereafter acquired by Borrower or Guarantor. Neither Borrower nor Guarantor is in default in any material
respect under any law, rule, regulation, order, writ, judgment, injunction, decree or contractual restriction described in Subsection 4.3(ii) above. 
 Section 4.4 Governmental Consents 
 No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body is required for the due execution, delivery and, other than standard permits and approvals required during the course of the Development Work, performance by Borrower and
Guarantor of the Loan Documents or any other document executed pursuant thereto or in connection therewith. Borrower has satisfied all conditions to the conveyance of the Land by the Agency to Borrower that are required to be satisfied in that
certain Escrow Closing Implementation Agreement (East Garrison DDA), dated as of                      , 2007, between Borrower and the
Agency, and consented to by the County of Monterey. 
  

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 Section 4.5 Validity 
 The Loan Documents have been duly executed and delivered by and constitute the legal, valid and binding obligations of Borrower and Guarantor, enforceable
in accordance with their respective terms. 
 Section 4.6 Financial Position 
 As of the dates prepared, the financial statements and all financial data heretofore delivered to Lender in connection with the Loan and/or relating to
Borrower and Guarantor are true, correct and complete in all material respects and were prepared in accordance with GAAP consistently applied. The financial statements fairly present the financial position of the Persons who are the subject thereof
as of the dates thereof. 
 Section 4.7 Governmental Regulations 
 Neither Borrower nor Guarantor is subject to regulation under the Investment Company Act of 1940, the Federal Power Act, the Public Utility Holding
Company Act of 1935, the Interstate Commerce Act, as the same may be amended from time to time, or any federal or state statute or regulation limiting its ability to incur Debt. 
 Section 4.8 Employee Benefit Plans 
 Neither Borrower nor Guarantor maintains any pension, retirement, profit sharing or similar employee benefit plan that is subject to ERISA other than a plan pursuant to which the entity’s contribution requirement is made concurrently
with the employees’ contributions. 
 Section 4.9 Securities Activities 
 Neither Borrower nor Guarantor is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of
purchasing or carrying any margin stock (as defined in Regulation U of the Board of Governors of the Federal Reserve System in effect from time to time) and not more than 25% of the value of the assets of either entity consists of such margin
stock. 
 Section 4.10 No Material Adverse Change 
 No Material Adverse Change has occurred since September 30, 2006. 
 Section 4.11 Payment of
Taxes 
 All tax returns and reports required to be filed by Borrower and Guarantor have been timely filed, or proper extensions for
filing have been obtained. All taxes, assessments, fees and other governmental charges upon Borrower, Guarantor and their properties, assets, income and franchises that are due and payable have been paid when due and payable, or proper extensions
for payment have been obtained, except to the extent that such taxes, assessments, fees and other governmental charges or the failure to pay the same would not be material to the respective business, properties, assets, operations, condition
(financial or otherwise) or business prospects 

  

 28 

 
of Borrower or Guarantor. Neither Borrower nor Guarantor has any knowledge of any proposed tax assessment against Borrower or Guarantor that could be
material to its business, properties, assets, operations, condition (financial or otherwise) or business prospects. 
 Section 4.12
Litigation 
 There is no pending or, to the knowledge of Borrower, threatened action, suit, proceeding or arbitration against or
affecting Borrower or Guarantor before any court, governmental agency or arbitrator, that may result in a Material Adverse Change. 
 Section 4.13 Environmental Matters 
 (a) Project. Borrower’s representations, warranties and covenants with
respect to all environmental matters relating to the Project are set forth in the Environmental Indemnity. 
 (b) Non-Projects. As to
each Non-Project, the operations of Borrower and Guarantor comply in all respects with all Hazardous Materials Laws except such noncompliance that would not (if enforced in accordance with applicable law) reasonably be expected to result,
individually or in the aggregate, in a Material Adverse Change. As of the date of this Loan Agreement, (i) neither Borrower, Guarantor nor their present properties or operations is subject to any outstanding written order from, or settlement or
consent agreement with, any governmental authority or other Person, nor is any of the foregoing subject to any judicial or docketed administrative proceeding respecting any Hazardous Materials Law, Hazardous Materials Claim or Hazardous Material
that reasonably could be expected to result in a Material Adverse Change, and (ii) there are no other conditions or circumstances known to Borrower that may give rise to any Hazardous Materials Claim arising from the operations of Borrower or
Guarantor that reasonably could be expected to result in a Material Adverse Change. 
 Section 4.14 No Burdensome Restrictions

 Neither Borrower nor Guarantor is a party to or bound by any contract or agreement, or subject to any charter or corporate restriction
or any requirement of law, that would reasonably be expected to result in a Material Adverse Change. 
 Section 4.15 Full Disclosure

 None of the statements contained in any exhibit, report, statement or certificate furnished by or on behalf of Borrower or Guarantor in
connection with the Loan Documents contains any untrue statement of a material fact, or omits any material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they are made,
not misleading; provided, however, that it is recognized by Lender that projections and forecasts provided and to be provided by Borrower and Guarantor, while reflecting Borrower’s and Guarantor’s good faith projections and forecasts,
based upon methods and data Borrower and Guarantor believes to be reasonable and accurate, are not to be viewed as facts and that actual results during the period or periods covered by any such projections and forecasts may differ from the projected
or forecasted results. 
  

 29 

 Section 4.16 Adequate Consideration 
 Borrower represents and warrants to Lender that prior to entering into this Loan Agreement, it has reviewed the benefits to be provided to it as a result
of Lender making the Loan and has concluded that the benefits are reasonably equivalent in value to the collateral to be pledged to secure the Loan and the obligations assumed and to be assumed by Borrower pursuant to the Loan Documents. Borrower
represents and warrants to Lender that neither Loan Documents nor any loan documents or security instruments executed and delivered by Borrower in connection with any Non-Project were entered into with the intent of defrauding any creditor or
providing any creditor with rights or security to which it is not reasonably entitled in connection with the transaction contemplated by such documents. Borrower further represents and warrants that Borrower and Guarantor are engaged in a common
enterprise and that the business of each of Borrower and Guarantor are benefited by the transactions contemplated in this Loan Agreement. 
 Section 4.17 USA Patriot Act 
 Borrower represents and warrants to Lender that neither Borrower nor any Affiliate of
Borrower is subject to any law, regulation, or list of any governmental agency (including, without limitation, the U.S. Office of Foreign Asset Control list) that prohibits or limits Lender from making any advance or extension of credit to Borrower
or any of its Affiliates or from otherwise conducting business with Borrower or any of its Affiliates. 
 Section 4.18 Development
Agreement and Disposition and Development Agreement 
 Borrower represents and warrants to Lender that the Development Agreement and the
Disposition and Development Agreement are in full force and effect without default thereunder. 

 30 

 ARTICLE 5 COVENANTS OF BORROWER 
 Section 5.1 Consideration 
 As an inducement to Lender to execute this Loan Agreement, make the
Loan and make each disbursement of the Loan, Borrower hereby covenants that, so long as any amount payable hereunder or under any other Loan Document remains unpaid or Lender has any commitment to disburse the Loan hereunder, Borrower must comply
with the covenants set forth in this Article 5. 
 Section 5.2 Reporting Requirements 
 Borrower will furnish or cause to be furnished to Lender the following notices and reports: 
 (1) Quarterly Project Status Reports. As soon as possible and in any event within 45 days after the end of each fiscal quarter, a
status report for the previous fiscal quarter relating to the Project, (i) describing the progress of the Development Work, (ii) describing sales activity and other material developments, (iii) describing substantial deviations in the
Development Work from the Plans and Specifications, or the existence of defective workmanship or materials incorporated into the Development Work, and (iv) setting forth the progress of the Development Work and actual costs of the Project as
compared with the Budget. 
 (2) Quarterly Financial Reports. As soon as possible and in any event within 60 days after
the end of each fiscal quarter of Borrower and Lyon Homes (other than the last quarter of any fiscal year for Borrower or Lyon Homes), the following: 
 (A) a statement of financial condition of Borrower and Lyon Homes, respectively, as of the end of such quarter, setting forth in comparative form the figures for the corresponding period of the preceding calendar
year, prepared in accordance with GAAP consistently applied. All such income statements shall reflect current period and year-to-date figures; 
 (B) unaudited financial statements of Borrower and Lyon Homes on a fully consolidated basis, which financial statements must include (i) a balance sheet as at the end of the fiscal quarter and
(ii) statements of income and cash flow for the period from the beginning of the then current fiscal year to the end of the fiscal quarter and setting forth in comparative form figures for the corresponding period of the preceding fiscal year,
all in reasonable detail and in accordance with GAAP consistently applied and certified by the Chief Financial Officer of Borrower and Lyon Homes, as applicable, to fairly present the financial condition of Borrower or Lyon Homes, as applicable, on
a fully consolidated basis as at the end of the fiscal quarter and the results of the operations of Borrower or Lyon Homes, as applicable, on a fully consolidated basis for the period ending on that date; and 
  

 31 

 (C) if required by Lender, a summary report of accounts payable aging for Borrower and
Lyon Homes; 
 (3) Compliance Certificate. As soon as possible and in any event within 45 days after the end of each
fiscal quarter of Borrower and Lyon Homes, a written statement from an authorized representative of Borrower and Lyon Homes certifying that Borrower and Lyon Homes, respectively, are in compliance with the terms of the Loan Documents, including all
of the financial covenants set forth in Section 5.5 hereof, or if Borrower or Lyon Homes is not in compliance, specifying the details of the non-compliance and the action being taken to correct the non-compliance; 
 (4) Annual Financial Statements of Borrower. As soon as possible and in any event within 120 days after the end of each fiscal
year of Borrower, audited financial statements of Borrower, which financial statements must include a balance sheet of Borrower as at the end of the fiscal year, statements of income, members’ equity and cash flow of Borrower for the fiscal
year, and setting forth in each case in comparative form figures for the preceding fiscal year, all in reasonable detail and in accordance with GAAP consistently applied accompanied by an unqualified opinion issued by an independent certified public
accountant reasonably acceptable to Lender. 
 (5) Annual Financial Statements of Guarantor. 
 (A) Annual Financial Statements of Lyon Homes. As soon as possible and in any event within 120 days after the end of each fiscal year of
Lyon Homes, audited financial statements of Lyon Homes on a fully consolidated basis, which financial statements must include a balance sheet of Lyon Homes as of the end of the fiscal year, statements of income, shareholders’ equity and cash
flow of Lyon Homes for the fiscal year, and setting forth in each case in comparative form figures for the preceding fiscal year, all in reasonable detail and in accordance with GAAP consistently applied and accompanied by an unqualified opinion
issued by an independent certified public accountant reasonably acceptable to Lender. 
 (B) Annual Financial Statements of
Woodman LLC and Woodman Inc. As soon as possible and in any event within 120 days after the end of each fiscal year of Woodman LLC and Woodman Inc., unaudited financial statements of such Guarantor, which financial statements must include a
balance sheet of such Guarantor as of the end of the fiscal year, statements of income, shareholders’ equity and cash flow of such Guarantor for the fiscal year, and setting forth in each case in comparative form figures for the preceding
fiscal year, all in reasonable detail and in accordance with GAAP consistently applied. 
 (C) Annual Financial Statements of
each Guarantor that is an individual or a trust. As soon as possible and in any event within 120 days after the end of each calendar year, unaudited statement of financial condition of such Guarantor, setting forth in comparative form the
figures for the corresponding 

  

 32 

 
period of the preceding calendar year, all in reasonable detail and in accordance with GAAP consistently applied. 
 (6) Compliance Certificate. As soon as possible and in any event within 120 days after the end of each fiscal year of Woodman LLC,
Woodman Inc. and each Guarantor that is an individual or a trust, a written statement from an authorized representative of such Person certifying that it is in compliance with the terms of the Loan Documents, or if it is not in compliance,
specifying the details of the non-compliance and the action being taken to correct the non-compliance. 
 (7) Notice of
Labor Controversy or other Force Majeure Event. As soon as possible and in any event within 5 Business Days after Borrower has knowledge of its occurrence, written notice of any labor controversy or other Force Majeure Event resulting in a
material strike, work stoppage, shutdown or other material disruption against or involving Borrower or the Project. 
 (8)
Notice of Material Adverse Change. As soon as possible and in any event within 5 Business Days after its occurrence, written notice and a description of any matter that has resulted, or may result, in a Material Adverse Change. 
 (9) Notice of Litigation. As soon as possible and in any event within 5 Business Days after institution thereof, written
notice and a description of any adverse litigation, action or proceeding commenced against Borrower or any of its Affiliates or relating to the Project, or any adverse litigation, action or proceeding commenced against any Guarantor that is likely
to result in a Material Adverse Change with respect to such Guarantor, and any adverse determination in any such litigation, action or proceeding. 
 (10) Notices of Default Regarding Other Financing. As soon as possible and in any event within 5 Business Days after Borrower has knowledge of the occurrence of any material event of default under any
other loan or credit agreement relating to other debt incurred by Borrower, any Guarantor or any of their Affiliates, written notice and a description of such event of default, the cure period (if any) available to cure such default, and the action
that Borrower or the relevant Guarantor or Affiliate proposes to take with respect thereto. 
 (11) Notice of Defaults.
As soon as possible and in any event within 5 Business Days after Borrower has knowledge of the occurrence of any Potential Default (however described) or Event of Default hereunder or an event of default (however described) under any other of
the Loan Documents, written notice and a description of the Potential Default, Event of Default or event of default and the action that Borrower proposes to take with respect thereto. 
 (12) Notices Regarding Hazardous Materials. As soon as possible and in any event within 5 Business Days after Borrower obtains
knowledge of an occurrence, written notice and a description of the release of any Hazardous Material in a quantity that requires monitoring, testing, reporting to any oversight agency or remediation, or any 

  

 33 

 
liability with respect thereto, on, under or in connection with the Project and the action that Borrower proposes to take with respect thereto. 

(13) Notices Regarding Project. As soon as possible and in any event within 5 Business Days after receipt by Borrower,
copies of all (i) notices of violation relating to and adversely affecting the Project that Borrower receives from any governmental agency or authority, (ii) notices of default that Borrower receives under the Construction Agreements or
any other agreement relating to and materially adversely affecting the Project, (iii) written notices that Borrower gives or receives under the Development Agreement or the Disposition and Development Agreement, and (iv) notices of default
that Borrower receives under any agreement relating to the borrowing of money by Borrower for the Project from any Person. 
 (14) Other Information. Any other information respecting the business, properties, assets, operations and condition, financial or otherwise, of Borrower, Guarantor, their Affiliates or the Project, including, without limitation,
copies of Project construction and sales reports, and any other rights or interests subject to the Loan Documents, that Lender may from time to time reasonably request. 
 Section 5.3 Borrower’s Operations and Management 
 Borrower will:

 (1) Compliance with Laws, Etc. Comply in all material respects, with all applicable laws, rules, regulations and
orders of any governmental authority, including but not limited to the Laws and Regulations, the noncompliance with which may result in a Material Adverse Change. 
 (2) Payment of Taxes and Claims. Pay (i) all taxes, assessments and other governmental charges imposed upon it or any of its
properties or assets or in respect of any of its franchises, business, income or profits before any penalty accrues thereon, and (ii) subject to Section 6.18, all claims (including, without limitation, claims for labor, services,
materials and supplies) for sums that have become due and payable and that by law have or may become a lien upon any of its properties or assets. 
 (3) Maintenance of Properties; Books and Records. Maintain or cause to be maintained: 
 (A) in good repair, working order and condition all properties and assets material to the continued conduct of the business of Borrower, and from time to time make or cause to be made all necessary repairs, renewals and replacements
thereof; and 
 (B) proper books, records and accounts in which full, true and correct entries in accordance with GAAP
consistently applied are made of all financial transactions and matters involving its assets and business. 

 34 

 (4) Change in Nature of Business. Make no material change in the nature of its
business as carried on at the date hereof. 
 (5) Maintenance of Existence. Maintain and preserve its existence and all
rights, privileges, qualifications, permits, licenses, franchises and other rights material to its business. 
 (6) Change
in State of Registration or Location of Executive Offices. Make no change to its state of organization or the location of its executive offices without giving Lender at least 30 days’ prior written notice. 
 (7) Management. Maintain professional and qualified management and staff to manage, operate and maintain its assets and business,
including but not limited to the Project. 
 Section 5.4 Insurance 
 (a) Borrower will maintain or cause its contractors to maintain the insurance required by the terms of this Loan Agreement and will deposit with Lender
original, duplicate original or certified copies of insurance certificates issued by insurance companies with current Best’s Key Ratings of not less than A/IX (as to those policies maintained by Borrower) and A/VII (as to those policies
maintained by its contractors) and written in form and content acceptable to Lender, providing the following minimum insurance coverages: 
 (1) “Comprehensive General Liability” (“CGL”) insurance in the minimum “general aggregate” amount of $2,000,000 for Borrower and $1,000,000 for its contractors, in the
minimum “occurrence” limit of $2,000,000 for Borrower and $1,000,000 for its contractors, and in the minimum “umbrella” amount of $10,000,000 for Borrower, in a standard CGL policy without any reduction in either Coverage A and
Coverage B, with the coverage including but not limited to all claims and liability for “personal injury”, bodily injury, death, damage to the project, products/completed operations, blanket contractual, and also including owners’ and
contractors’ protective coverage, and naming Lender as an additional insured. 
 (2) Insurance with respect to its
properties, assets and business against loss or damage of the kinds customarily insured against by Persons of established reputation engaged in the same or similar business and similarly situated, of such types and in such amounts as are customarily
carried under similar circumstances by such other Persons, all in accordance with reasonably prudent industry standards. 
 (3) Workers’ compensation insurance as prescribed by the laws of each state in which Borrower is required to maintain such insurance, and employers’ liability with such limits no less than those as prescribed by law or that would
be maintained by reasonably prudent business entities engaged in the same type of business as Borrower. 
 (4) A special form
builder’s risk course of construction insurance policy covering all risks/open perils in the minimum amount of the proposed construction cost for the Project on a replacement cost basis, against loss or damage by hazards 

  

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customarily included within special form policies covering all risks/open perils, and any other risks or hazards that in Lender’s reasonable judgment
should be insured against, with a Lender’s Loss Payable Endorsement naming Lender as an additional insured, together with a full replacement cost endorsement (without provisions for co-insurance). 
 (5) Either (i) flood insurance in the maximum amount of the budgeted construction costs or the maximum coverage available, whichever
is less, designating Lender as payee, or (ii) evidence satisfactory to Lender that the Project is not located within an area designated as within the 100 year flood plain under the National Flood Insurance Program. 
 (b) The policies of insurance required under Subparagraphs 1, 2, 4 and 5 of Subsection 5.4(a) must contain the
“standard non-contributory mortgagee clause” and the “standard lenders’ loss payable clause,” or their equivalents, in favor of Lender and/or its assignees, and must provide that it will not be modified or canceled without
30 days’ prior written notice to Lender. Borrower must also furnish Lender with receipts for the payment of premiums on the policies or other evidence of payment reasonably satisfactory to Lender. 
 (c) If Borrower does not deposit with Lender new certificates of insurance evidencing each new policy of insurance required and evidence of payment of
premiums thereon at least 30 days prior to the expiration of any expiring policy, then Lender may, but will not be obligated to, procure the insurance, and Borrower will pay the premiums thereon to Lender promptly upon demand. 
 (d) Lender will not, by the fact of approving, disapproving, accepting, preventing, obtaining or failing to obtain any such insurance, incur any
liability for the form or legal sufficiency of insurance contracts, solvency of insurers or payment of losses, and Borrower hereby expressly assumes full responsibility therefor and all liability related thereto, if any. 
 (e) Borrower will obtain and maintain any other types and amounts of insurance coverage that Lender may from time to time reasonably deem necessary or
appropriate. 
 (f) Borrower shall obtain and maintain no less coverage than is required under the Disposition and Development Agreement or
by any governmental or quasi-governmental authority. 
 Section 5.5 Financial Covenants 
 Borrower must comply or assure compliance with each of the following financial covenants: 
 (a) As to Borrower: 
 (1)
Tangible Net Worth. For so long as the greater of the Loan Amount or the outstanding principal balance of the Loan is equal to or greater than $15,000,000, Borrower will maintain a Tangible Net Worth in an amount of not less than $10,000,000.

  

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 (2) Loan to Value Ratio. Borrower will at no time permit the Maximum Loan to Value
Ratio to be exceeded. 
 (b) As to Lyon Homes: 
 (1) Tangible Net Worth. Lyon Homes will at all times maintain a Tangible Net Worth in an amount equal to or in excess of the sum of $385,000,000, plus fifty percent (50%) of Lyon Homes’ quarterly Net
Income commencing on July 1, 2006 (with any net loss counting as zero in such calculation). 
 (2) Ratio of Total
Liabilities to Tangible Net Worth. Lyon Homes will at all times maintain a ratio of Total Liabilities (exclusive of consolidated liabilities of variable interest entities) to Tangible Net Worth of not more than 3.5 to 1.0. 
 Section 5.6 Incurrence of Debt 
 So long as any amount payable under any Loan Document still remains unpaid or Lender will have any commitment to disburse the Loan hereunder, Borrower may not, unless Lender otherwise consents in writing, incur any Debt, other than
(i) Debt created or contemplated by the Loan Documents or this Loan Agreement, including but not limited to (A) the FORA Loan and Borrower’s obligation to pay a portion of the interest owing on the FORA Loan, (B) the Shortfall
Loan, (C) obligations owing under any Community Facilities District formed to fund a portion of the costs to construct public infrastructure serving the Project and under any Community Services District formed to provide ongoing maintenance for
certain elements of such infrastructure, provided such district has been approved by Lender, and (D) obligations under any performance, completion, or other bonds required to be posted in favor of the Agency, the County of Monterey or any other
governmental agency in connection with the Development Work; (ii) taxes and assessments not yet due and payable; and (iii) trade debt incurred in the ordinary course of Borrower’s business. 
 Section 5.7 No Transfers 
 There
shall be no Transfer unless Borrower has obtained the written consent of Lender, which consent may be granted or withheld in Lender’s sole and absolute discretion. 
 Section 5.8 USA Patriot Act 
 Without the prior written consent of Lender, neither Borrower nor
any Affiliate of Borrower will (i) be or become subject at any time to any law, regulation, or list of any government agency (including, without limitation, the U.S. Office of Foreign Asset Control list) that prohibits or limits Lender from
making any advance or extension of credit to Borrower or Borrower’s Affiliates or from otherwise conducting business with Borrower or Borrower’s Affiliates, or (ii) fail to provide documentary and other evidence of Borrower’s or
Borrower’s Affiliates’ identity as may be requested by Lender at any time to enable Lender to verify Borrower’s or Borrower’s Affiliates’ identity or to comply with any applicable law or regulation, including, without
limitation, Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318. 
  

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 Section 5.9 Further Assurances; Cooperation 
 Borrower will at any time and from time to time upon request of Lender take or cause to be taken any action, will execute, acknowledge, deliver or record
any further documents, opinions, mortgages, security agreements, financing statements, amendments to the Loan Documents or other instruments as Lender in its reasonable discretion deems necessary or appropriate to carry out the purposes of this Loan
Agreement and to preserve, protect and perfect the security interest intended to be created and preserved in the Project. In furtherance of the above, from time to time, upon the reasonable request of Lender, Borrower will execute and deliver to
Lender a security instrument or instruments naming Lender as secured party covering all contracts of any kind entered into in connection with the Project and all other property of any kind whatsoever owned by Borrower and used, or to be used, in the
use and enjoyment of the Project and concerning which Lender may have any doubt as to its being subject to the lien of the Loan Documents. 
 Section 5.10 Development Work Must Be Included in Budget 
 Borrower will not perform any Development Work or
construction any other improvements on the Project that are not included within the approved Budget without the prior written consent of Lender. 
 Section 5.11 Recordation of Final Maps 
 Borrower will cause to be recorded against the Land a final Map in form and
substance satisfactory to Lender with respect to (i) Phase 1 by June 30, 2007, (ii) Phase 2 by June 30, 2008, and (iii) Phase 3 by June 30, 2009. 
 Section 5.12 Development Agreement and Disposition and Development Agreement 
 Borrower will keep the Development Agreement and the Disposition and Development Agreement in full force and effect and perform all of its obligations
thereunder in a timely manner and shall not amend or otherwise modify or permit the amendment or modification of either without the prior written consent of Lender. 
 Section 5.13 Management 
 Borrower will at all times maintain professional and qualified
management and staff, as determined in the reasonable discretion of Borrower, to manage, operate and maintain the Project, and if any such personnel cease to work on the Project they shall promptly be replaced by personnel with the requisite
professionalism and qualifications, as determined in the reasonable discretion of Borrower, to manage, operate and maintain the Project. 
 Section 5.14 Development Work in any Phase 
 Borrower will not perform any Development Work other than Development Work
that is described in a Phase Commitment that has been executed and delivered by Borrower and Lender. 
  

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 Section 5.15 Certain Permits/Licenses 
 Borrower will not permit the expiration or revocation of any permits or licenses that significantly impact the Project, including, without limitation,
that certain Incidental Take Permit and the Right of Entry License. 
 Section 5.16 Homebuilders 
 Borrower will not permit any Person to construct Homes other than (a) its members, Lyon East Garrison and Woodman LLC and Affiliates thereof pursuant
to the Operating Agreement, and (b) other qualified homebuilders reasonably approved by Lender or permitted under the Disposition and Development Agreement pursuant to contracts reasonably approved by Lender. 
  

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 ARTICLE 6 THE PROJECT 
 Section 6.1 Consideration 
 As an inducement to Lender to finance the Project and to make each
disbursement of the Loan for the Project, Borrower represents and warrants the truth and accuracy of the matters regarding the Project set forth in this Article 6 and hereby covenants regarding the Project as set forth in this
Article 6. 
 Section 6.2 Title to Project 
 (a) Borrower is, or will be upon acquisition of the Land, and during and after completion of the Development Work as contemplated in this
Loan Agreement, the sole legal and beneficial owner of the Land (other than those portions of the Land contemplated in the Disposition and Development Agreement to be transferred to third parties and that are transferred in accordance with this
Agreement and the other Loan Documents), the Development Work, free and clear of all claims, liens and encumbrances other than Permitted Exceptions. All of the personal property that forms a part of the Development Work is or will be vested solely
in Borrower, free and clear of all claims, liens and encumbrances, and the security interest of Lender in such personal property is a first lien thereon. 
 (b) At any time after the occurrence of a Potential Default or an Event of Default , Lender may request the Title Company, at Borrower’s expense, to provide a “date down” endorsement to the Title Policy
as described in Section 3.2(12). 
 Section 6.3 No Prior Liens or Claims 
 Except as otherwise may have been approved in writing by Lender and as to which Lender has received such endorsements (including mechanics lien coverage)
to the Title Policy as Lender may require to assure the priority of the Security Instrument as a valid first lien on the Project, subject only to Permitted Exceptions, Borrower represents that, prior to recordation of the Security Instrument,
neither Borrower, nor anyone acting on Borrower’s behalf has (i) commenced construction of the Development Work, any grading or site clearance related thereto, or any work of any kind or nature that could give rise to a lien against the
Project, (ii) purchased, contracted for or otherwise brought upon the Land any materials, specially fabricated or otherwise, to be incorporated into any work to be performed on the Land, including the Development Work, or (iii) entered
into any contract or arrangement, the performance of which by any other party thereto could give rise to a lien or claim on the Project or any portion thereof. 
 Section 6.4 Access to the Project 
 All roads, streets, traffic turn lanes, and access ways
necessary for the full utilization of the Project for its intended purpose have either been completed or the necessary rights of way have either been acquired by the appropriate governmental authority or have been dedicated to public use and
accepted by the appropriate governmental authority. The Project is either contiguous to, or otherwise has access via a permanent, recorded easement, to any public streets or roads necessary to provide access to the Project. All necessary steps have
been taken by 

  

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Borrower and the appropriate governmental authority to assure the complete construction and installation thereof by the time needed for construction of the
Development Work and/or occupancy and operation of the Project. 
 Section 6.5 Compliance with Laws and Regulations 

The Project, the proposed and actual use thereof, and the Development Work when completed will comply with the Laws and Regulations. There is no action
or proceeding pending or, to the knowledge of Borrower (after due inquiry), threatened before any court, quasi-judicial body or administrative agency relating to the validity of the Loan or the proposed or actual use of the Project. 
 Section 6.6 Covenants, Zoning, Codes, Permits and Consents 
 Borrower is familiar and has complied with all of the Laws and Regulations to be complied with in connection with the construction of the Development Work. All Regulatory Approvals in connection with (i) the
valid execution, delivery and performance of the Loan Documents or any and all other documents executed in connection with any of the foregoing, (ii) necessary for the subdivision of the Land, and (iii) necessary for the construction of
the Development Work, have been obtained, or in a timely manner will be obtained, and are valid, adequate and in full force and effect. Construction of the Development Work and the intended use thereof will conform to and comply in all material
respects with all Laws and Regulations. 
 Section 6.7 Utilities 
 All utility services and facilities necessary for the construction of the Development Work are either available for each owner from time to time of each
Finished Lot at the boundaries of the Land or, if not, all necessary steps have been taken by Borrower and the local authority or public utility company that provides such services to obtain permanent rights (recorded in the appropriate real estate
records of the county in which the Land is located) over any lands intervening between the Land and any public rights of way and to assure the complete installation and permanent availability thereof when needed for construction, sale, occupancy and
operation of the Project. 
 Section 6.8 Survey, Map, Permits, Licenses and Approvals 
 Borrower has received a tentative map, and Borrower covenants and agrees to cause a final Map to be recorded by not later than the date set forth in the
Loan Summary. Borrower will properly comply with and keep in effect the Map and all permits, licenses and approvals that are required to be obtained from governmental bodies in order to construct, occupy, operate, market and sell the Project.
Borrower will promptly deliver copies of the Map for each Phase and all such permits, licenses and approvals to Lender. 
 Section 6.9 Plans and Specifications; Budget 
 (a) The Plans and Specifications are a true, complete and accurate
depiction in all material respects of the Development Work. The Plans and Specifications are satisfactory to Borrower and have been or will be timely reviewed and approved by Borrower and the general 

  

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contractor for the Project. The Plans and Specifications have also been approved (or will in a timely manner be approved) as required by all governmental
bodies or agencies having jurisdiction (including, without limitation, any local design review boards) and by the beneficiary of any restrictive covenant affecting, or the holder of any other approval rights with respect to, the Project. There are
no structural defects in the Development Work as shown in the Plans and Specifications, and no violation of any of the Laws and Regulations exists with respect to the Plans and Specifications. 
 (b) After diligent investigation of all relevant conditions and due consultation with such parties as Borrower deems appropriate, Borrower represents
that the Budget identifies on a line item basis all costs to be incurred in connection with the Project and all costs for which proceeds of the Loan are to be disbursed. The Budget reflects Borrower’s best, true, accurate and complete estimate,
but not a guaranty, of the costs shown therein and of the costs estimated to be necessary to construct the Project in accordance with the Plans and Specifications. 
 Section 6.10 Changes to Plans and Specifications and Budget 
 (a) The following Changes, whether
made by change order or otherwise, to any of (i) the Budget, (ii) the Plans and Specifications, or (iii) working drawings relating to the Development Work, require the prior written approval of Lender: 
 (1) any Change that, together with all prior increases, will result in an increase to the total Budget for the Development Work of 5% or
more, it being understood that the foregoing does not apply to increases to particular line items of the Budget unless the increase to the line item will result in an increase to the total Budget for the Development Work of 5% or more; 

(2) any Change that, together with all prior decreases, will result in a decrease to the total Budget for the Development Work of 5% or
more, it being understood that the foregoing does not apply to decreases to particular line items of the Budget unless the decrease to the line item will result in a decrease to the total Budget for the Development Work of 5% or more; 
 provided, however, with respect to subparagraphs (a)(1) and (a)(2) above, that Borrower may not offset against each other increases and decreases in the total
Budget for the Development Work, it being the intent that an increase or a decrease in the total Budget for the Development Work that meets any of the thresholds set forth in subparagraphs (a)(1) or (a)(2) or in this
subparagraph (a)(3) will require the prior approval of Lender; and 
 (b) As a condition to its approval of any Change described
in subparagraph (a), Lender may require verification that the Change: 
 (1) is a Change as to which Borrower has
complied with the terms of subparagraph (d) of this Section 6.10; 
 (2) will not adversely affect the value
of Lender’s security; 
  

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 (3) is not a material change in structure, design, exterior appearance, square footage,
or function; 
 (4) would not cause an increase in any line item or category of the Budget in excess of the contingencies (if
any) specifically contained in the Budget for that line item or category; 
 (5) has been approved by the Inspector;

 (6) would be consistent with the Laws and Regulations; and 
 (7) is a Change as to which Borrower has obtained any approvals required pursuant to Section 6.10(e). 
 Lender is under no duty to review or inform Borrower of the quality or suitability of the Plans and Specifications, any contract or subcontract or any
changes thereto. Notwithstanding anything to the contrary contained in this Section 6.10, Borrower must obtain Lender’s prior written approval of any alteration in the Plans and Specifications that might adversely affect the value
of Lender’s security or that, regardless of cost, is a material change in structure, design, function or exterior appearance. 
 (c)
Borrower agrees to provide Lender with copies of all change orders, together with all additional documents that Lender may reasonably require in order to evaluate a request for approval of a Change of a type described in subparagraph
(a) above. These documents may include the following: (i) a written description of the Change and related working drawings and (ii) a written estimate of the cost of the Change and the time necessary to complete it. Lender may
take a reasonable time to evaluate any requests for approval of a Change, and may require that all other approvals required from other parties be obtained before it reviews any requested Change. Lender may approve or disapprove Changes in the
exercise of its reasonable judgment. Borrower acknowledges that any requested Changes may result in delays and agrees that any delays caused by Lender or any other Person or circumstance will not affect Borrower’s obligation to complete each
element of the Development Work in accordance with the Construction Progress Schedule, subject to extensions due to Force Majeure Events. 
 (d) If either: 
 (1) the proceeds of the Loan that are available for disbursement will not be sufficient to complete
the Development Work as scheduled; or 
 (2) the costs of the Project have increased over the amount set forth in the Budget
by an amount in excess of the amount set forth in subparagraphs (a)(1) or (a)(3), 
 then Borrower must submit to Lender a revised Budget for the
Project, together with (i) a request that Lender approve an increase in the Loan Amount, which request Lender may approve or disapprove in its absolute and sole discretion, or (ii) evidence that Borrower has sufficient funds to pay the
increased costs. If Borrower provides evidence of sufficient funds, Lender will not be obligated to disburse additional amounts of the Loan pursuant to Section 3.2 until Borrower provides to Lender evidence that it has paid from its own
funds, in addition to any Borrower 

  

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funds that the Budget requires, an amount at least equal to the increase. Any such revised Budget for the Project submitted to Lender must be accompanied by
a written report from the Inspector stating that the Inspector has reviewed and approved the revised Budget. 
 (e) In addition to obtaining
the prior written approval of Lender in connection with any Change described in this Section 6.10, Borrower must also obtain, to the extent that such approvals may be required, (i) the approvals of the appropriate governmental
authorities to any Change and (ii) from the appropriate persons or entities approvals of any alterations in the Map, the Plans and Specifications or any work, materials or contracts that are required by any of the Laws and Regulations or under
the terms of this Loan Agreement or the other Loan Documents. 
 Section 6.11 Adequacy of Loan Amount 
 The Loan Amount is sufficient to pay all costs of the acquisition of the Land and all costs of the Development Work in accordance with the Plans and
Specifications and all remaining costs related thereto, except as has been specifically disclosed to and approved in writing by Lender. 
 Section 6.12 Construction Start and Completion 
 Borrower will commence construction of the Development Work no later
than the date set forth in the Loan Summary. Borrower will thereafter diligently proceed with construction and completion of the Development Work in a good and workerlike manner in accordance with the Plans and Specifications and the Construction
Progress Schedule, provided that dates set forth in the Construction Progress Schedule will be extended up to a maximum of one hundred twenty (120) days if (i) the delay could not reasonably have been anticipated and avoided, (ii) the
delay was caused by a Force Majeure Event, and (iii) Borrower shall have given Lender notice of such Force Majeure Event and its anticipated impact on the Construction Progress Schedule within fifteen (15) days after the commencement of
the Force Majeure Event. Borrower will cause the Development Work at all times to materially conform to the Laws and Regulations and will accomplish completion of the Development Work in accordance with the Construction Progress Schedule. Borrower
will cooperate at all times with Lender in bringing about the timely completion of each element of the Development Work, and Borrower will resolve all disputes arising during the work of construction in a manner that will allow work to proceed
expeditiously. 
 Section 6.13 Personal Property Incorporation 
 All personal property for which Lender advances Loan proceeds for the Project is to be stored on the Land and in Lender’ s judgment must be
reasonably secure from damage and theft and fully insured at all times. 
 Section 6.14 Contractors and Contracts 
 From time to time, upon demand by Lender, Borrower will furnish to Lender, correct lists of all contractors and subcontractors employed in connection with
the Development Work. Each such list must show the name, address and telephone number of each such contractor or subcontractor, a general statement of the nature of the work to be done, the labor and materials to 

  

 44 

 
be supplied, the names of material providers, if known, and the approximate dollar value of the labor, work and materials with respect to each. Upon an Event
of Default, Lender has the right, and at any time the Inspector has the right (in both cases without either the obligation or the duty), to contact directly each contractor, subcontractor and materialman to verify the facts disclosed by the list or
for any other purpose. 
 Section 6.15 Evidence of Ownership of Materials 
 If requested by Lender, Borrower will promptly deliver to Lender any bills of sale, statements, receipts, contracts or agreements under which Borrower
claims title to any materials, fixtures or articles incorporated into the Development Work. 
 Section 6.16 Lender Inspections,
Appraisal and Information 
 During normal business hours, Borrower will arrange for Lender, the Inspector or any other authorized
representative of Lender, at the expense of Borrower, to visit, inspect or appraise the Project. The scope of any such inspection may include (but is not limited to) the materials to be used on or in the Project, contracts, records, plans,
specifications and shop drawings relating thereto (whether kept at Borrower’s offices or at the Project construction site or elsewhere), and the books, records, accounts and other financial and accounting records of Borrower, wherever kept.
Lender, the Inspector or other authorized representative may make copies and take extracts thereof and therefrom as often as may be reasonably requested by Lender. Borrower will cooperate with Lender to enable Lender, the Inspector or other
authorized representatives of Lender to conduct such visits, inspections and appraisals. Borrower agrees to keep at its offices or at the Project, and to make available to Lender during normal business hours, the Plans and Specifications on an
as-built basis or, if unavailable, the final set of Plans and Specifications from which the Development Work was constructed. 
 Section 6.17 Correction of Defects 
 If Lender in its reasonable judgment determines that any Development Work or
materials fail to conform to the Map, any Laws and Regulations or sound building practices or fail to conform in any material respect to the Plans and Specifications, or that they otherwise depart in any material respect from any of the requirements
of this Loan Agreement, Lender may require the work to be stopped and Lender may withhold disbursements until the matter is corrected. If this occurs, Borrower will promptly correct the work to Lender’s reasonable satisfaction, and pending
completion of such corrective work will not allow any other work that is dependent upon or directly related to the work requiring correction to proceed. No such action by Lender will affect Borrower’s obligation to complete each element of the
Development Work within the times required by this Loan Agreement. The advance of any Loan proceeds will not constitute a waiver of Lender’s right to require compliance with this covenant. 
 Section 6.18 Protection Against Lien Claims 
 (a) Borrower will pay and discharge, or cause to be paid and discharged, promptly and fully all claims for labor done and materials and services furnished in connection with the Development Work, and take or cause to
be taken all reasonable steps to forestall the assertion of claims of lien against the Project or any part thereof. Upon the request of Lender, Borrower 

  

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will obtain a lien waiver with respect to each payment by or to Borrower and each of the various subcontractors and materialmen (and the major subcontractors
and submaterialmen under them). Lender, at any time, at its option, may require that any disbursement made hereunder be made by joint check made payable to Borrower and the subcontractor or sub-subcontractor for whose account the payment is to be
made, as joint payees. 
 (b) Nothing herein contained requires Borrower to pay any claims for labor, materials, or services that Borrower in
good faith disputes and that Borrower, at its own expense, currently and diligently contests, provided that, if the aggregate amount of claims filed with respect to the Project exceeds $25,000, within thirty (30) days after Borrower’s
actual receipt of notice of filing of that claim of lien that exceeds the specified amount, Borrower must take one of the following actions with respect to all subsequent claims: 
 (1) record or cause to be recorded in the office of the recorder of the county in which the Project is located a surety bond sufficient to
release the claim of lien, or 
 (2) make or cause to be made a deposit with Lender of cash or a letter of credit from an
issuer and in form and substance satisfactory to Lender, in the amount of 150% of the claim of lien; or 
 (3) deliver or
cause to be delivered to Lender any other assurance that may be acceptable to Lender; 
 provided, however, that if any claim of lien for labor, materials or
services is filed, regardless of the amount thereof, Borrower will deliver or cause to be delivered to Lender a specific endorsement to the Title Policy that insures Lender against any loss by reason of the claim of lien. 
 Section 6.19 Approval of Easements 
 All easements, declarations, covenants, conditions, restrictions and dedications affecting the Project must be submitted to Lender for its approval, accompanied by a drawing or survey showing the precise location thereof. Borrower must
obtain Lender’s written approval, which shall not be unreasonably withheld, conditioned or delayed, prior to the execution or granting of any such easement, declaration, covenant, condition, restriction or dedication by Borrower, provided that
nothing contained in this Section 6.19 (a) is to be deemed to limit Lender’s rights or Borrower’s obligations pursuant to Section 5.7 above, or (b) permits Lender to unreasonably withhold, condition or
delay its approval of any such easement, declaration, covenant, condition, restriction or dedication to the extent it is expressly required under the Disposition and Development Agreement or is expressly required by the County or the Agency pursuant
to a condition of approval of the Project. If Lender withholds or conditions its approval of any easement, declaration, covenant, condition, restriction or dedication, Lender shall provide Borrower with a statement of the specific reasons for such
withholding or condition. 

 46 

 Section 6.20 Signs 
 Upon the request of Lender, Borrower will erect and place on or in the vicinity of the Project a sign or signs indicating that Lender has provided
construction financing for the Project. The sign(s) will remain the property of Lender and will be required to be removed only after the Development Work has been completed. 
  

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 ARTICLE 7 SALES AND RELEASES 
 Section 7.1 Sales Agreements 
 (a) The Lots and other tracts of real property comprising the Land
will be (x) sold under Sales Agreements, Borrower’s interest in which will be assigned to Lender, or (y) transferred to members of Borrower or their respective Affiliates in accordance with the Operating Agreement. In the event of a
default by a buyer under a Sales Agreement, Borrower (or, during the continuance of an Event of Default, Lender, as assignee of Borrower) may, to the extent permitted under the Sales Agreement, (i) retain the balance of funds in any escrow
account established pursuant to the particular Sales Agreement, or (ii) draw upon any letter of credit issued by the buyer in connection with the purchase of any Lot(s) or tract(s) and in each case apply it to the payment of the Loan in any
manner that Lender determines in its sole discretion. If a Sales Agreement allows Borrower immediate access and use of a deposit or escrow funds paid pursuant to the particular Sales Agreement, Borrower will use those funds only for the Development
Work. 
 (b) If Lender will be asked to release its lien on a Lot or other tract of real property comprising the Land, (i) any and all
Sales Agreements must require full payment in cash to Borrower at closing in an amount at least equal to the Scheduled Release Prices for such Lot or other tract of real property, and (ii) unless the cash purchase price payable to Borrower at
closing is at least equal to the Scheduled Release Price for a Lot or tract of real property (other than pursuant to a conveyance under the Operating Agreement), no Lot or tract may be leased, sold or conveyed under any lease, conditional sales
contract or other arrangement where Borrower retains a deferred portion of the purchase price or any residual or contingent interest in the Lot or tract, including any purchase money security interest, without the express prior written consent of
Lender in each instance. Borrower will, upon Lender’s request, provide to Lender a fully executed copy of all Sales Agreements. 
 Section 7.2 Sales and Closings 
 Borrower may enter into Sales Agreements for the sale of the Lots or other tracts of
real property comprising the Land in the ordinary course of business without Lender’s prior written consent if: 
 (1) a
Sales Agreement is executed with a buyer that conforms to the requirements of this Loan Agreement; and 
 (2) Borrower, acting
in good faith following exercise of reasonable due diligence, has determined that the buyer is financially capable of performing all of its obligations under the Sales Agreement. 
 Lender in the exercise of its reasonable discretion may consider any sale to be unsatisfactory if the sale fails to meet any of the requirements of this
Loan Agreement. If this happens, or if any Event of Default has occurred and is continuing, Lender may make written demand on Borrower to submit future Sales Agreements for Lender’s approval prior to execution, together in each instance with
accompanying financial statements for the buyer and 

  

 48 

 
other information that Borrower may have pertaining to the prospective buyer. Borrower will comply immediately with any such demand by Lender. 
 Section 7.3 Releases from Lien of Security Instrument 
 (a) Borrower may from time to time request that Lender release one or more Lots or other tracts of real property comprising the Property from the lien of the Security Instrument and the other Loan Documents
encumbering those Lots or tracts. Lender agrees that it will execute a partial release that releases Lender’s lien on the Lots or tracts pursuant to the Security Instrument and the other Loan Documents, provided that the following conditions
precedent have been satisfied: 
 (1) Lender has received a written notice requesting the partial release no fewer than 5
Business Days prior to the date on which the partial release is to be effective, which notice specifies (i) the Phase of the Project, (ii) the specific Lots or tracts to be released, (iii) if the release is being requested in
connection with a sale of the Lots or tracts, the Person to whom the Lots or tracts are being sold, which Person may be a member or an Affiliate of Borrower or Guarantor, and (iv) Lender’s Release Price(s) therefor; 
 (2) Lender has received evidence satisfactory to Lender that (i) the closing of the sale and/or release of the Lots or tracts is
conducted through an escrow with a title company specified by Borrower and satisfactory to Lender, and (ii) the title company is instructed, pursuant to written instructions that have been acknowledged and agreed to by the title company and
that cannot be changed or supplemented without Lender’s written concurrence, not to record Lender’s partial release until the title company receives in respect of the release an amount equal to Lender’s Release Price for the Lots or
tracts and is irrevocably committed to disburse the amount to Lender; 
 (3) Lender has received any executed originals (or
copies, at the sole discretion of Lender) of instruments, agreements and other documents, in form and substance satisfactory to Lender, that Lender determines are necessary or appropriate to evidence and/or effectuate the partial release and to
modify the Loan Documents as a result thereof; 
 (4) Lender has received evidence satisfactory to Lender that Borrower has
satisfied all conditions precedent in the Loan Documents relating to the release of the Lots or tracts; 
 (5) no Event of
Default then exists; and 
 (6) sufficient collateral remains, in Lender’s reasonable discretion, to secure the
outstanding balance (and any reasonably anticipated increases thereto) of the Loan. 
 In connection with each release of a Lot or tract,
provided all conditions to the release have been met, Lender agrees to provide to the title insurance company an estoppel letter, in form and substance satisfactory to Lender, specifying Lender’s Release Price. 
  

 49 

 (b) Lender also agrees that, without requiring payment of any release price, it will release from the
lien of the Security Instrument and the other Loan Documents those portions of the Project necessary for utility easements, dedicated public roads, common elements (including any parts of the Project to be transferred to a homeowners’
association or the like), parks, greenbelts, recreation areas, schools, medical facilities, sheriff’s substation, library, fire station, and other similar purposes, the Town Center and Rental Affordable Housing, provided that the following
conditions precedent have been satisfied: 
 (1) Borrower complies with the requirements of subparagraphs (1), (3),
(4) and (5) of subparagraph (a) above (except that the requirement of subparagraph (a)(1) requiring the written notice to specify Lender’s Release Price(s) is not applicable); 
 (2) Lender is furnished with a survey, or another document reasonably satisfactory to Lender, depicting and describing the real property
to be released; 
 (3) the requested release is consistent in all material respects with the Map, approved tentative map, site
plan or other depiction of the Project provided to Lender as part of the Project Underwriting Documents; 
 (4) with respect
to the release of the Lots or tracts on which the Rental Affordable Housing is or is to be located, there is no restriction under the Disposition and Development Agreement on the ability of Borrower to obtain building permits for Homes intended to
be constructed on the Land based on the status of development or construction of the Rental Affordable Housing, and Lyon Homes shall have executed and delivered to the Agency the completion guaranty required under the Disposition and Development
Agreement to lift any such restriction; and 
 (5) with respect to the release of the Lots or tracts on which the Town Center
is or is to be located, there is no restriction under the Disposition and Development Agreement on the ability of Borrower to obtain building permits for Homes to be constructed on the Land based on the status of development or construction of the
Town Center, and Borrower, any of Borrower’s members, or any purchaser of such Town Center Lots or tracts shall have caused to be posted the performance bond required under the Disposition and Development Agreement to lift any such restriction.

  

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 ARTICLE 8 EVENTS OF DEFAULT AND REMEDIES 
 Section 8.1 Events of Default 
 The occurrence and continuance of any of the following events constitutes an “Event of Default” hereunder: 
 (1) Borrower fails to pay any installment of principal on the Loan when due, whether at stated maturity, as a result of a mandatory prepayment requirement, upon acceleration or otherwise, or pay when due any interest,
fees or other amounts payable hereunder or under the other Loan Documents. 
 (2) Any representation or warranty made by
Borrower or Guarantor herein or in any other Loan Document is at any time incorrect in any material respect. 
 (3) Borrower
or Guarantor fails to perform or observe any term, covenant or agreement contained in this Loan Agreement or any other Loan Document, and the failure remains unremedied for 30 days after notice thereof from Lender to Borrower or Guarantor; provided
that if Borrower or Guarantor commences and is diligently pursuing to completion action to cure the failure, the 30 day period may be extended for the period of time necessary to cure the failure, but in no event longer than 120 days from the date
of Lender’s notice; provided further however, that if (i) Lender reasonably determines that the failure to immediately declare an Event of Default could result in irreparable harm to the rights of Lender hereunder or under any other Loan
Document, or the rights of Lender with respect to the collateral pledged to secure the Loan, or (ii) Lender reasonably determines that the failure to perform or observe the terms of this Loan Agreement or any other Loan Document cannot be
remedied with the passage of 120 days, then Lender may declare an immediate Event of Default in its notice given pursuant to this Section 8.1(3). 
 (4) Borrower or any Guarantor asserts the invalidity or unenforceability of any Loan Document or any Loan Document is adjudicated to be
invalid or unenforceable in any material respect. 
 (5) Any event of default (however described) by Borrower or any Guarantor
under any other Loan Document occurs and is not cured within the applicable grace period. 
 (6) Any Loan Document that
purports or is otherwise intended to create a lien on or in the Land or other collateral relating thereto as described therein (including, without limitation, the Security Instrument) for any reason, ceases to create a valid and perfected first
priority lien on or in the Land or other collateral relating thereto as described therein, or Borrower so states in writing. 
 (7) The dissolution or winding up of Borrower, Lyon Homes, any co-managing member of Borrower or any sole member or managing member of any such co-managing member; provided, however, that it shall not be an Event of Default hereunder if
such co-managing member or sole member or managing member is Woodman LLC or 

  

 51 

 
Woodman Inc. or a replacement thereof and is replaced within thirty (30) days of such dissolution or winding up by a co-managing member, sole member or
managing member, as applicable, reasonably satisfactory to Lender. 
 (8) Any Transfer occurs in violation of
Section 5.7. 
 (9) Borrower or Lyon Homes fails to comply with any of the financial covenants set forth in
Section 5.5 (or in the Guaranty, in the case of Guarantor). 
 (10) A Material Adverse Change occurs with respect
to Borrower or Lyon Homes. 
 (11) Any final judgment or order for the payment of money in excess of $200,000, singularly or
in the aggregate, is rendered against Borrower or Lyon Homes, and either (i) enforcement proceedings have been commenced by any creditor upon the judgment, or (ii) there is a period of forty-five (45) days during which a stay of
enforcement of the judgment or order, by reason of a pending appeal or otherwise, is not in effect. 
 (12) Borrower or Lyon
Homes fails to pay any Debt (other than the Debt incurred by Borrower with respect to the Loan, the Events of Default with respect to which are set forth elsewhere in this Section 8.1), or any interest or premium thereon, when due
(whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) and the failure continues after the applicable grace period, if any, specified in the agreement or instrument relating to the Debt; any other default under any
agreement or instrument relating to any such Debt, or any other event, occurs and continues after the applicable grace period, if any, specified in such agreement or instrument, if the effect of the failure to pay, default or event results in the
acceleration, or permits the acceleration of, the maturity of the Debt; or any such Debt is declared to be due and payable, or is required to be prepaid (other than by a regularly scheduled required prepayment) prior to the stated maturity thereof;
provided, however, that none of the foregoing events or inactions shall constitute an Event of Default unless such event of inaction could result in a Material Adverse Change. 
 (13) (i) Borrower, Lyon Homes, any co-managing member of Borrower or any sole member or managing member of any such co-managing member
generally does not pay its Debts as those Debts become due, or admits in writing its inability to pay its Debts generally, or makes a general assignment for the benefit of creditors; or (ii) any proceeding is instituted by or against any such
Person seeking to adjudicate either party as bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of the party’s Debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee or other similar official for the party or for any substantial part of the party’s property; and in the
case of any such proceeding instituted against Borrower, Lyon Homes, any co-managing member of Borrower or any sole member or managing member of any such co-managing member (but not instituted by it), either the proceeding remains undismissed or
unstayed for a 

  

 52 

 
period of sixty (60) days (whether or not consecutive), or any of the actions sought in the proceeding (including, without, limitation, the entry of an
order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or for any substantial part of its property) occur; or Borrower, Lyon Homes, any co-managing member of Borrower or any sole member or
managing member of any such co-managing member takes any action to authorize any of the actions set forth above; provided, however, it shall not be an Event of Default under this Section 8.1(13) if any of the events described in the
foregoing clause (i) or (ii) affect only Woodman LLC and/or Woodman Inc. and all of the following conditions are at all times satisfied: 
 (1) Woodman LLC and Woodman Inc. immediately cease to be a managing member of Borrower and have no further management or decision-making
role in Borrower or with respect to the Property; 
 (2) such event does not result in Borrower or all or any portion of the
Property being the subject of any bankruptcy or insolvency proceeding; 
 (3) such event does not result in any actions or
decisions pertaining to the ownership, development, construction or operation of the Property or the operations or activities of Borrower being subject to the approval or oversight of any bankruptcy court, any trustee in bankruptcy, any receiver or
any other party that is subject to, or acting on behalf of, any party that is subject to any bankruptcy or insolvency proceeding; and 
 (4) Lender is not required to appear in any bankruptcy or insolvency proceeding or obtain any authorization, consent, approval or other relief to enforce its rights and remedies under the Loan Documents against the
Property, Borrower, any Guarantor or any other party except Woodman Inc. and/or Woodman LLC. 
 (14) Borrower fails to
commence construction of the Development Work or fails to satisfy all of the conditions of this Loan Agreement with respect to disbursement of Loan proceeds for costs of such construction on or before the date set forth in the Loan Summary.

 (15) Borrower fails to meet or comply with any of the projections or other provisions of the Construction Progress Schedule
(which failure Lender reasonably believes may result in impairment of the value of its security for the Loan or in the ability of Borrower to repay the Loan Amount as required by the terms of the Loan Documents), and does not cure that failure
within thirty (30) days after written notice from Lender; provided that the cure period is not applicable (i.e., there will be no cure period) if Lender has reasonably determined that the failure is not susceptible to cure within thirty
(30) days. 
 (16) Borrower fails to obtain Lender’s prior written consent to any Change to the extent so required
under Section 6.10, or the existence of materially adverse defective workmanship or materials incorporated into the Development Work, which deviations or 

  

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defects are not corrected within forty-five (45) days after written notice thereof to Borrower, such deviations and defects to be conclusively
determined by Lender after consultation with the Inspector. 
 (17) Cessation of the Development Work for a continuous period
of (i) one hundred twenty (120) days or more if the cessation is caused by a Force Majeure Event, or (ii) sixty (60) days or more if the cessation is not caused by a Force Majeure Event. 
 (18) A court of competent jurisdiction enters an order enjoining construction of the Development Work, or such a court or an authorized
governmental agency orders that sales of the Lots be suspended or halted, or any required approval, license or permit is withdrawn or suspended, and the order, withdrawal or suspension remains in effect for a period of sixty (60) days.

 (19) Any surety obligated for any Development Work is called upon to perform its obligations and/or any Person demands
funds pursuant to any set aside letter or “cash in lieu of bond agreement” issued by any party other than Lender with respect to the Project. 
 (20) There occurs any attachment, levy, execution or other judicial seizure of any portion of the Project, any other collateral provided by Borrower under any of the Loan Documents, or any substantial portion of the
other assets of Borrower, that is not released, expunged, discharged or dismissed prior to the earlier of (i) forty-five (45) days after the attachment, levy execution or seizure, or (ii) the sale of the assets affected thereby.

 (21) Borrower fails to cause to be recorded against the Land a final Map in form and substance satisfactory to Lender with
respect to (i) Phase 1 by June 30, 2007, (ii) Phase 2 by June 30, 2008, or (iii) Phase 3 by June 30, 2009. 
 (22) Borrower permits the Maximum Loan to Value to be exceeded, and the Loan is not paid down to an amount such that the Maximum Loan to Value is no longer exceeded within ten (10) days after demand by Lender.

 (23) The County of Monterey gives written notice terminating or canceling the Development Agreement or the Agency gives
written notice terminating or canceling the Disposition and Development Agreement, or either agreement ceases to be in full force and effect. 
 (24) Any two (2) or more of Wade Cable, Thomas J. Mitchell, Douglas F. Bauer, Richard S. Robinson or Michael D. Grubbs shall cease to be employed by Lyon or Borrower on a continuous and full time basis with power
and responsibility to manage the material day to day operations of Lyon, Borrower and their respective subsidiaries. 
 Borrower acknowledges
and agrees that all material non-monetary defaults are conclusively deemed to be and are defaults that impair the security of the Security Instrument, and that Lender will be entitled to exercise any appropriate remedy, including without limitation,
foreclosure of the Security Instrument upon the occurrence of any such material non-monetary 

  

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default. 
 Section 8.2 Remedies

 Upon the occurrence of any Event of Default, the following provisions apply: 
 (1) If the event is an Event of Default specified in Section 8.1(13), Lender’s commitment to fund the Loan will terminate
and the indebtedness evidenced by the Note and any other amounts payable under this Loan Agreement and the other Loan Documents will immediately and automatically become due and payable. 
 (2) Upon the occurrence of any other Event of Default, other than an Event of Default specified in Section 8.1(13), Lender
may, at its option, do any one or more of the following: 
 (A) Immediately terminate any further advance of Loan funds
hereunder, and from time to time apply all or any portion of the undisbursed Loan funds to payment of accrued interest under the Note and/or upon any other obligations of Borrower hereunder or under the Loan Documents. Lender may also withhold any
one or more disbursements during the continuance of a Potential Default, unless Borrower cures or corrects the event or condition to the reasonable satisfaction of Lender prior to the occurrence of an Event of Default. 
 (B) Declare the Note to be immediately due and payable and record a notice of default under the Security Instrument. 
 (C) Make any disbursements after the happening of any one or more Events of Default, without thereby waiving its right to demand payment
of the Note and all other sums owing to Lender with respect to the Loan Documents or any other rights or remedies described herein, and without liability to make any other or further disbursements, notwithstanding Lender’s previous exercise of
any such rights and remedies. 
 (D) Enter upon the Project and with or without legal process take possession of the Project,
remove Borrower and all employees, contractors and agents of Borrower therefrom, and complete or attempt to complete construction of the Development Work in accordance with the Plans and Specifications (provided that Lender may cause any changes,
additions or corrections to be made therein that Lender may from time to time and in its judgment deem appropriate), and market, sell or lease the Project, at the risk and expense of Borrower. Lender will have the right at any time to discontinue
any work commenced by it in respect to the Development Work or to change any course of action undertaken by it and not be bound by any limitations or requirements of time whether set forth herein or otherwise. Lender will have the right and power
(but will not be obligated) to assume any construction contract made by or on behalf of Borrower in any way relating to the Development Work and to take over and use all or any part of the labor, materials, supplies and equipment contracted for, by
or on behalf of Borrower whether or not previously incorporated into the Development Work, 

  

 55 

 
in the discretion of Lender. Lender may also modify or terminate any contractual arrangements, subject to its right at any time to discontinue any work
without liability. If Lender chooses to complete the Development Work, Lender will not assume any liability to Borrower or any other person for completing them, or for the manner or quality of their construction, and Borrower expressly waives any
such liability. In connection with any work of construction undertaken by Lender pursuant to the provisions of this subsection (D), Lender may do any of the following: 
 i. engage builders, contractors, subcontractors, architects, engineers, suppliers, inspectors, consultants and others for the purpose of
furnishing labor, materials, equipment and other services in connection with the work of construction, for the protection or clearance of title to the Project, or for the protection of Lender’s interests with respect thereto; 
 ii. pay, settle or compromise all bills or claims that may become liens against the Project or that have been or may be incurred in any
manner in connection with completing construction of the Development Work or for the protection or clearance of title to the Project, or for the protection of Lender’s interests with respect thereto; 
 iii. prosecute and defend all actions and proceedings in connection with the Project; 
 iv. execute, acknowledge and deliver all other instruments and documents in the name of Borrower that are necessary or desirable, to
exercise Borrower’s rights under contracts concerning the Project; and 
 v. take any other action, including the
employment of security personnel to protect the Development Work, or refrain from taking action under this Loan Agreement that Lender may in its discretion determine from time to time. 
 Borrower will be liable to Lender for sums paid or incurred for completing construction of the Development Work whether the same is paid or incurred
pursuant to the provisions of this section or otherwise. All payments made or liabilities incurred by Lender hereunder of any kind whatsoever must be paid by Borrower to Lender upon demand with interest at the rate set forth in the Note. All of the
foregoing will be deemed and will constitute disbursements under this Loan Agreement and be secured by the Loan Documents. For the purpose of carrying out the provisions and exercising the rights, powers and privileges granted by this subsection
(D), Borrower hereby unconditionally and irrevocably constitutes and appoints Lender its true and lawful attorney-in-fact to enter into any contracts, perform the acts and incur the liabilities that are referred to in this subsection
(D) in the name and on behalf of Borrower. This power of attorney is coupled with an interest. 
 (E) If
(i) substantial deviations from the Plans and Specifications appear that have not been approved as set forth herein, (ii) defective or 

  

 56 

 
unworkerlike labor or materials are being used in the construction of the Development Work, (iii) Lender receives knowledge of encroachments to which
there has been no consent, or Lender determines that the Development Work are not being constructed in accordance with any governmental requirements or any covenants, conditions, restrictions, agreements or other matters, whether or not of record,
affecting the condition of title to the Project, Lender will have the right to immediately order stoppage of the construction and demand that such conditions be corrected. 
 (F) After issuance of an order in writing as set forth above in subsection (E), no further work may be done on that portion of the
Development Work where there is a substantial deviation from the Plans and Specifications that has not been approved as set forth herein, where there is defective or unworkmanlike labor or materials, or that does not comply with governmental
requirements or matters affecting title to the Project, without the prior written consent of Lender, which consent will not be unreasonably withheld, unless and until any such condition has been fully corrected. 
 (G) Foreclose on any security for the Loan without waiving its rights to proceed against any other security or other entities or
individuals directly or indirectly responsible for repayment of the Loan, or waive any and all security for the Loan as Lender may in its discretion so determine, and pursue any other remedy or remedies that Lender may determine to be in its best
interest. 
 (H) Exercise all rights and remedies available to it under the Guaranty or any other guaranty of Borrower’s
obligations with respect to the Loan. 
 (I) Accelerate all of Borrower’s and/or Guarantor’s obligations under the
Loan Documents without notice of default, presentment or demand for payment, protest or notice of nonpayment or dishonor, or other notices or demands of any kind or character, at Lender’s option, exercisable in its sole discretion, and apply
any undisbursed Loan funds to the obligations of Borrower under the Loan Documents, in any order and proportions that Lender in its sole discretion may choose. 
 Whether or not Lender elects to employ any or all of the remedies available to it in connection with an Event of Default, Lender will not be liable for (i) Borrower’s construction of or failure to construct,
complete or protect the Development Work, (ii) the payment of any expense incurred by Lender for the construction or completion of the Development Work undertaken by Borrower, or (iii) the performance or non-performance of any other
obligation of Borrower. 
 All remedies of Lender provided for herein and in any other Loan Documents are cumulative and are in addition to
all other rights and remedies provided by law or in equity. The exercise of any right or remedy by Lender hereunder will not in any way constitute a cure or waiver of default hereunder or under any other Loan Document or invalidate any act done
pursuant to any notice of default, or prejudice Lender in the exercise of any of its rights 

  

 57 

 
hereunder or under any other Loan Document. If Lender exercises any of the rights or remedies provided in this Article 8, that exercise will not
make Lender, or cause Lender to be deemed to be, a partner or joint venturer of Borrower. No disbursement of Loan funds by Lender will cure any default of Borrower, unless Lender agrees otherwise in writing in each instance. 
 Section 8.3 Authorization to Apply Assets to Payment of Loan 
 Borrower hereby authorizes Lender, following the occurrence of an Event of Default, without notice or demand, to apply any property, balances, credits, accounts or moneys of Borrower then in the possession of Lender,
or standing to the credit of Borrower, to the payment of the Loan. 
  

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 ARTICLE 9 MISCELLANEOUS 
 Section 9.1 Successors and Assigns; No Assignment by Borrower 
 The provisions of this Loan
Agreement will be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, provided that Borrower’s rights regarding Transfers are limited as provided in Section 5.7 above. 

Section 9.2 Notices 
 All
notices, requests and demands to be made hereunder to the parties hereto must be in writing (at the addresses set forth below) and may be given by any of the following means: 
 (1) personal delivery; 
 (2) reputable, national overnight courier service; 
 (3) by telecopying (if confirmed in
writing sent by registered or certified, first class mail, return receipt requested); or 
 (4) registered or certified, first
class mail, return receipt requested. 
 Any notice, demand or request sent pursuant to the terms of this Loan Agreement will be deemed
received (i) if sent pursuant subsection (1), upon such personal delivery, (ii) if sent pursuant to subsection (2), on the next Business Day following delivery to the courier service, (iii) if sent pursuant to
subsection (3), upon dispatch if such dispatch occurs between the hours of 9:00 a.m. and 5:00 p.m. (recipient’s time zone) on a Business Day, and if such dispatch occurs other than during such hours, on the next Business Day following
dispatch and (iv) if sent pursuant to subsection (4), 3 days following deposit in the mail. 
 The addresses for notices are
as follows: 
  

					
	 To Lender:
	 	Residential Funding Company, LLC
		 	8400 Normandale Lake Boulevard, Suite 250
		 	Minneapolis, Minnesota 55437
		 	Attention:	 	Managing Director
		 		 	Business Capital Group
		 		 	Residential Construction
		 	Telephone No.:	 	(952) 857-6968
		 	Telecopier No.:	 	(952) 857-6943

  

 59 

					
	 With a copy to:
	 	Residential Funding Company, LLC
		 	8400 Normandale Lake Boulevard, Suite 250
		 	Minneapolis, Minnesota 55437
		 	Attention:	 	Chief Counsel
		 		 	Business Capital Group
		 	Telephone No.:	 	(952) 857-6911
		 	Telecopier No.:	 	(952) 857-6949

  

					
	 To Borrower:
	 	East Garrison Partners I, LLC
		 	c/o Lyon East Garrison Company I, LLC
		 	4490 Von Karman Avenue
		 	Newport Beach, California 92660
		 	Attention:	 	Mike Grubbs
		 	Telephone No.:	 	(949) 476-5475
		 	Telecopier No.:	 	(949) 252-2575
		
		 	 and to

  

					
		 	East Garrison Partners I, LLC
		 	c/o Woodman Development Company, LLC
		 	24571 Silver Cloud Court, Suite 101
		 	Monterey, California 93940
		 	Attention:	 	John Anderson
		 	Telephone No.:	 	(831) 647-2449
		 	Telecopier No.:	 	(831) 674-2441

 The failure to provide courtesy copies will not affect or impair Lender’s rights and remedies
against Borrower. Such addresses may be changed by notice to the other parties given in the same manner as provided above. 
 Notwithstanding
the foregoing, all requests for disbursements of the Loan pursuant to Article 3 above will be deemed received only upon actual receipt, and such requests for disbursement must be given only to Lender’s primary addressee. 

Section 9.3 Borrower’s Representatives 
 (a) Borrower hereby designates the following natural persons as its representatives and the representatives of Guarantor for purposes of (i) making all decisions with respect to the Loan, the Project and the Loan
Documents, (ii) delivering all notices, certificates, Draw Request Certifications, requests and other documents required by the terms of the Loan Documents or requested by Lender in connection with the Loan and (iii) taking all other
actions requested by Borrower or Guarantor in connection with the Loan, the Project and the Loan Documents: 
 Lyon Representatives: Any person listed
on Exhibit I attached hereto shall be a Lyon Representative, provided that Lender shall be entitled to rely, without further investigation, upon any update of Exhibit I that has been provided by a Person listed on the most recently
provided version of Exhibit I. 
  

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	Woodman Representatives:	 	
		
	Ian Gillis	 	Keith McCoy
	Woodman Development Company, LLC	 	Woodman Development Company, LLC
	24571 Silver Cloud Court, Suite 101	 	24571 Silver Cloud Court, Suite 101
	Monterey, California 93940	 	Monterey, California 93940
	Telephone No.: (831) 647-2443	 	Telephone No.: (831) 647-2443
	Facsimile No.: (831) 674-2441	 	Facsimile No.: (831) 674-2441

  

			
		 	John Anderson
		 	Woodman Development Company, LLC
	and	 	24571 Silver Cloud Court, Suite 101
		 	Monterey, California 93940
		 	Telephone No.: (831) 647-2449
		 	Facsimile No.: (831) 674-2441

 (b) Any one of the Lyon representatives and any one of the Woodman representatives listed in
Section 9.3(a) are together duly authorized to execute all of the foregoing on behalf of Borrower and/or Guarantor, as the case may be, and in taking action pursuant to the terms of this Loan Agreement and the other Loan Documents,
Lender is entitled to rely, without further investigation, upon any notice, certificate, Draw Request Certification, request or other document delivered in writing and executed or signed by such representatives of Borrower and Guarantor. In
addition, Lender may, at its option, refuse to take action if a notice, certificate, Draw Request Certification, request or other document is delivered to Lender that has not been executed or delivered by such designated representatives of Borrower.

 Section 9.4 Changes, Waivers, Discharge and Modifications in Writing 
 No provision of this Loan Agreement or any of the other Loan Documents may be changed, waived, discharged or modified except by an instrument in writing
signed by the party against whom enforcement of the change, waiver, discharge or modification is sought. 
 Section 9.5 No Waiver;
Remedies Cumulative 
 No disbursement of proceeds of the Loan will constitute a waiver of any conditions to Lender’s obligation to
make further disbursements nor, if Borrower is unable to satisfy any such conditions, will any such waiver have the effect of precluding Lender from thereafter declaring such inability to constitute an Event of Default (however described) under this
Loan Agreement or any other Loan Document. No failure or delay on the part of Lender in the exercise of any power, right or privilege under this Loan Agreement or any other Loan Document will impair such power, right or privilege or be construed to
be a waiver of any Event of Default (however described) or acquiescence therein, nor will any single or partial exercise of any such power, right or privilege preclude any other or further exercise thereof, or of any other right, power or privilege.
Except as specifically provided herein, all rights and remedies existing under this Loan Agreement and the other Loan Documents are cumulative to and not exclusive of any rights or remedies otherwise available. 
  

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 Section 9.6 Costs, Expenses and Taxes 
 Borrower agrees to pay the costs, and all expenses incurred by Lender in connection with the preparation, execution, delivery, administration,
modification and amendment of this Loan Agreement, the other Loan Documents and any other documents to be delivered hereunder. The costs and expenses to be paid by Borrower include, without limitation, the following: 
 (1) the reasonable fees and out-of-pocket expenses of counsel for Lender, with respect to the matters described above and with respect to
advising Lender as to its rights and responsibilities under this Loan Agreement and the other Loan Documents; 
 (2) any and
all stamp and other taxes payable or determined to be payable in connection with the execution and delivery of this Loan Agreement, the other Loan Documents and the other documents to be delivered hereunder; 
 (3) the reasonable fees, costs and expenses of any Appraisers retained by Lender; 
 (4) the reasonable fees, costs and expenses of any Inspectors and any other authorized representatives retained by Lender to inspect the
Project or any matters related thereto; and 
 (5) the costs associated with the issuance of the date-down endorsements
required by the terms of Section 3.2(12). 
 Borrower further agrees to pay all costs and expenses of Lender (including, without
limitation, reasonable counsel fees and expenses, court costs and all other litigation expenses, including, but not limited to, reasonable expert witness fees, document copying expenses, exhibit preparation, courier expenses, postage expenses and
communication expenses) in connection with Lender’s exercising or enforcing any of its rights or remedies under this Loan Agreement, the other Loan Documents and any other documents delivered hereunder, including, without limitation, costs and
expenses incurred in connection with any bankruptcy, insolvency, liquidation, reorganization, moratorium or other similar proceeding, or any refinancing or restructuring in the nature of a “workout” of the Loan Documents and any other
documents delivered by Borrower and Guarantor related thereto. 
 Payment from Borrower of amounts due pursuant to this
Section 9.6 will be due 10 days after it has received from Lender written notice of the nature of the item for which payment is required and all such sums will bear interest at the rate applicable to the principal balance of the
Note, from the date such funds were spent until repaid. Such amounts will be deemed secured by the Security Instrument and other applicable Loan Documents. 
 Section 9.7 Disclaimer by Lender; No Joint Venture 
 Borrower acknowledges, understands and
agrees as follows: 
 (1) The relationship between Borrower and Lender is, and will at all times remain, solely that of
borrower and lender, and Lender neither undertakes nor assumes 

  

 62 

 
any responsibility for or duty to Borrower, Guarantor or any Affiliate to select, review, inspect, supervise, pass judgment upon or inform Borrower of the
quality, adequacy or suitability of any matter or thing submitted to Lender for its approval. 
 (2) Lender owes no duty of
care to protect Borrower, Guarantor or any Affiliate or any other Person against negligent, faulty, inadequate or defective building or construction. 
 (3) Borrower is not and will not be an agent of Lender for any purpose. Lender is not a joint venture partner with Borrower in any manner whatsoever. Approvals granted by Lender for any matters covered under this Loan
Agreement are to be narrowly construed to cover only the parties and facts identified in any such approval. 
 Section 9.8
Indemnification 
 In addition to the separate and independent Environmental Indemnity, Borrower agrees to protect, indemnify, defend and
hold harmless each Indemnified Party from and against any and all claims, damages, losses, liabilities, obligations, penalties, actions, judgments, suits, costs, disbursements and expenses (including, without limitation, reasonable fees and expenses
of counsel and consultants and allocated costs of internal counsel) that may be incurred by or asserted against any Indemnified Party, in each case arising out of or in connection with or related to any of the following: 
 (1) the Loan, this Loan Agreement or any other Loan Document; 
 (2) the Project; 
 (3) the use of funds advanced under the Loan Documents; or 
 (4) the failure of Borrower, Guarantor or any other
party to the Loan Documents (other than Lender) to comply fully with any and all laws applicable to it; 
 whether or not an Indemnified Party is a party
thereto and whether or not the transactions contemplated hereby are consummated, except to the extent such claims, damages, losses, liabilities, obligations, penalties, actions, judgments, suits, costs, obligations, penalties, disbursements and
expenses are found in a final non-appealable judgment by a court of competent jurisdiction to have resulted from a material default by Lender under any provisions of the Loan Documents or from the gross negligence or willful misconduct of the
Indemnified Party. Without prejudice to the survival of any other agreement of Borrower hereunder, the agreements and obligations of Borrower contained in this Section 9.8 will survive the termination of this Loan Agreement and the other
Loan Documents and the payment in full of the Loan. 
 Section 9.9 Consultants 
 Borrower will pay any and all valid claims of any consultants, advisors, brokers or agents whom either it, Guarantor, or any of their Affiliates has
retained or with whom it has initiated contact with respect to the Loan who claims a right to any fees in connection with the Loan. 

  

 63 

 
Borrower will indemnify, defend and hold Lender harmless from such claims, whether or not they are valid, pursuant to the terms of Section 9.8
above. 
 Section 9.10 Governing Law 
 This Loan Agreement is governed by and construed in accordance with the laws of the State of California. 
 Section 9.11 Titles and Headings 
 The titles and headings of sections of this Loan Agreement are intended for
convenience only and are not in any way to affect the meaning or construction of any provision of this Loan Agreement. 
 Section 9.12 Counterparts 
 This Loan Agreement may be executed in any number of counterparts, each of which will be
deemed an original and all of which will constitute one and the same agreement with the same effect as if all parties had signed the same signature page. 
 Section 9.13 Lender’s Rights with Respect to Loan 
 Notwithstanding any provision to the
contrary contained in this Loan Agreement or any other Loan Document, Lender, without notice to Borrower or Guarantor and without their consent, may at any time sell, assign, grant or transfer to any Person all or a portion of its interest in or
rights with respect to the Loan and in all or part of the obligations of Borrower and any other obligated party under the Loan Documents. 
 Section 9.14 Confidentiality 
 Borrower and Lender will mutually agree on the contents of any press release, public
announcement or other public disclosure regarding this Loan Agreement and the transactions contemplated hereunder to be made following the mutual execution and delivery of this Loan Agreement; provided that Lender may disclose the terms hereof and
give copies of the Loan Documents, the Project Underwriting Documents and any other materials related to the Loan, the Project, Borrower or Guarantor, to assignees and participants and to prospective assignees and participants. If either party fails
to respond to the other party in writing with either an approval or a disapproval within 5 Business Days of a party’s receipt of the other party’s request for consent or approval as expressly contemplated pursuant to this
Section 9.14, then such consent or approval will be deemed to have been given, provided that the 5 Business Day period will not commence to run unless and until the other party has received all information, materials, documents and other
matters required to be submitted to it hereunder with respect to the consent or approval and all other information, materials, documents and other matters reasonably essential to its decision process. 
 Section 9.15 Time is of the Essence 
 Time is of the essence of this Loan Agreement. 
  

 64 

 Section 9.16 No Third Parties Benefited 
 This Loan Agreement is made and entered into for the sole protection and legal benefit of Borrower, Guarantor and Lender and their permitted successors
and assigns, and no other Person will be a direct or indirect legal beneficiary of, or have any direct or indirect cause of action or claim in connection with this Loan Agreement or any of the other Loan Documents. Lender will not have any
obligation to any Person not a party to this Loan Agreement or the other Loan Documents. 
 Section 9.17 Severability 

The illegality or unenforceability of any provision of this Loan Agreement or any instrument or agreement required hereunder will not in any way affect
or impair the legality or enforceability of the remaining provisions of this Loan Agreement or any instrument or agreement required hereunder. 
 Section 9.18 Jurisdiction 
 Any legal action or proceeding with respect to this Loan Agreement or any of the other Loan
Documents may be brought in the courts of the State of California or of the United States sitting in Monterey County, California. By execution and delivery of this Loan Agreement, each of Borrower and Lender consents, for itself and in respect of
its property, to the jurisdiction of those courts (other than a foreclosure proceeding, in which event any such action, suit or proceeding must be brought in the appropriate forum in the state in which the Property is located). Each of Borrower and
Lender irrevocably waives any objection, including any objection to the laying of venue or based on the grounds of forum non conveniens that it may now or hereafter have to the bringing of any action or proceeding in that jurisdiction in respect to
this Loan Agreement or any document related hereto. Borrower and Lender each waive any personal service of any summons, complaint or other process, which may be made by any other means permitted by California law. Nothing in this
Section 9.18 will affect the right of Lender to serve legal process in any other manner permitted by law or limit the right of Lender to bring any action or proceeding against Borrower or its property in the courts of any other
jurisdiction. 
  

 65 

 Section 9.19 Waiver of Jury Trial 
 Borrower and Lender waive, to the extent permitted by law, their respective rights to a trial by jury or any claim or cause of action based upon or arising out of or
related to this Loan Agreement, the other Loan Documents or the transactions contemplated hereby or thereby in any action, proceeding or other litigation of any type brought by any party against any other party, whether with respect to contract
claims, tort claims, or otherwise. Borrower and Lender agree that any such claim or cause of action will be tried by a court trial without a jury. 
 Without
limiting the foregoing, the parties further agree that their respective right to a trial by jury is waived by operation of this section as to any action, counterclaim or other proceeding that seeks, in whole or in part, to challenge the validity or
enforceability of this Loan Agreement or the other Loan Documents or any provision hereof or thereof. 
 This waiver will apply to any subsequent amendments,
renewals, supplements or modifications to this Loan Agreement and the other Loan Documents. 
 Borrower and Lender hereby agree that this Loan Agreement
constitutes a written consent to waiver of trial by jury pursuant to the provisions of all applicable laws and Borrower does hereby constitute and appoint Lender its true and lawful attorney-in-fact, which appointment is coupled with an interest.
Borrower does hereby authorize and empower Lender, in the name, place and stead of Borrower, to file this Loan Agreement with the clerk or judge of any court of competent jurisdiction as a statutory written consent to waiver of trial by jury.

  

											
	 Initials:
	 		 		 		 	 Lender:
	 	  

						
		 	 Borrower:
	 		 	WLH1:              	 	WLH2:             	 	WDC:             

 Section 9.20 Interpretation 
 This Loan Agreement and the other Loan Documents will not be construed against Lender merely because of Lender’s involvement in the preparation of
such documents and agreements. 
 Section 9.21 Destruction of Note 
 If the Note is mutilated or destroyed by any cause whatsoever, or otherwise lost or stolen and regardless of whether due to the act or neglect of Lender,
Borrower will execute and deliver to Lender in substitution therefor a duplicate promissory note containing the same terms and conditions as the Note, within 10 days after Lender notifies Borrower of any such mutilation, destruction, loss or
theft of the Note, which notification shall include a certification by Lender to Borrower that such mutilation, destruction, loss or theft of the Note, as applicable, has occurred. Upon Borrower’s delivery of a duplicate promissory note,
Borrower will be relieved of all obligations under the original Note and will thereafter be bound solely by the provisions of the duplicate promissory note. 
  

 66 

 Section 9.22 Entire Agreement 
 This Loan Agreement, together with the other Loan Documents, embodies the entire agreement and understanding among Borrower, Guarantor and Lender and
supersedes all prior or contemporaneous agreements and understandings of those persons, verbal or written, relating to the subject matter hereof and thereof except for any prior arrangements made with respect to the payment by Borrower of (or any
indemnification for) any fees, costs or expenses payable to or incurred (or to be incurred) by or on behalf of Lender. 
  

 67 

 IN WITNESS WHEREOF, Lender and Borrower have caused this Loan Agreement to be duly executed and delivered
as of the date first above written. 
  

					
	 BORROWER:

	
	 EAST GARRISON PARTNERS I, LLC,

	 a California limited liability company

		
	 By:
	 	 Lyon East Garrison Company I, LLC,

		 	a California limited liability company,
		 	its co-managing member
			
		 	By:	 	William Lyon Homes, Inc.,
		 		 	a California corporation,
		 		 	its sole member

  

					
		 	By:	 	  

			
		 	Name:	 	  

			
		 	Title:	 	  

  

					
		 	By:	 	  

			
		 	Name:	 	  

			
		 	Title:	 	  

  

					
	By:	 	Woodman Development Company, LLC,
		 	a California limited liability company,
		 	its co-managing member
			
		 	By:	 	Woodman Development Company, Inc.,
		 		 	a California corporation,
		 		 	its managing member

  

									
		 		 	By:	 		 	  

					
		 		 	Name:	 		 	  

					
		 		 	Title:	 		 	  

  

 68 

			
	 LENDER:

	
	RESIDENTIAL FUNDING COMPANY, LLC,
a Delaware limited liability company
		
	 By:
	 	  

		
	 Name:
	 	  

		
	 Title:
	 	  

  

 69 

 EXHIBIT A 
 CONDITIONS TO OBLIGATION OF LENDER TO MAKE THE LOAN 
 The obligation of Lender to make the Loan is
conditioned upon Lender having received, in form and substance satisfactory to Lender, each of the following: 
 (1) Executed
originals of each of the Loan Documents. 
 (2) The Project Underwriting Documents, executed originals of the other Loan
Documents and any other agreements, instruments, certificates and opinions that Lender requires in connection with the Project. 
 (3) A counterpart of Lender’s Escrow Instructions confirming that the Security Instrument has been duly recorded or is insured as being in a first-priority lien position, which first-priority lien position will be evidenced and insured
by the Title Policy to be issued in accordance with Lender’s Escrow Instructions. 
 (4) Evidence that Lender’s
security interests in all personal property and any fixtures covered by the Security Instrument are (or upon filing will be) duly perfected and in a first-priority lien position. 
 (5) Evidence that all taxes, fees and other charges in connection with the recording/filing of the Loan Documents have been paid by
Borrower, and that all delinquent taxes, assessments or other governmental charges or liens affecting the Project, if any, have been paid, or if not paid, Borrower has posted a bond or other security acceptable to Lender with respect to such unpaid
taxes. 
 (6) A favorable opinion from counsel for Borrower with respect to the following: 
 (A) Borrower is duly organized, validly existing and in good standing as a limited liability company under the laws of the State of
California, is duly qualified to do business and in good standing in every jurisdiction where its business or properties require qualification and has all requisite power and authority to own and operate its properties and to carry on its business
as now conducted. 
 (B) Borrower has the power and authority to execute and deliver, and perform its obligations under, the
Loan Documents. 
 (C) The execution, delivery and performance by Borrower of the Loan Agreement and the Note have been duly
authorized by all necessary action and do not and will not (i) contravene the Certificate of Formation/Articles and Bylaws or charter documents of Borrower; (ii) contravene any law, rule or regulation or, to counsel’s knowledge (after
due investigation), any order, writ, judgment, injunction or decree or any contractual restriction binding on or affecting 

  

 A - 1 

 
Borrower; (iii) require any approval or consent of any member or any other Person other than approvals or consents that have been previously obtained
and disclosed in writing to Lender; (iv) to counsel’s knowledge, result in a breach of or constitute a default under any indenture or loan or credit agreement or any other agreement, lease or instrument to which Borrower is a party or by
which Borrower or any of its properties may be bound or affected; or (v) to counsel’s knowledge, result in, or require the creation or imposition of, any lien of any nature (other than the contemplated liens) upon or with respect to any of
the properties now owned or hereafter acquired by Borrower; and, to counsel’s knowledge, Borrower is not in default under any such law, rule, regulation, order, writ, judgment, injunction, decree or contractual restriction or any such
indenture, agreement, lease or instrument. 
 (D) The Loan Documents to be executed by Borrower have been duly authorized,
executed and delivered and constitute the legal, valid and binding obligations of Borrower enforceable in accordance with their respective terms. 
 (E) No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution, delivery and performance by Borrower of the Loan
Documents or any other document executed pursuant thereto or in connection therewith. 
 (F) To counsel’s knowledge,
there is no pending or threatened action, suit, proceeding or arbitration against or affecting Borrower or any of its Affiliates before any court, governmental agency or arbitrator that, if adversely determined, would result in a Material Adverse
Change. 
 (G) The amounts to be received by Lender under the terms of the Loan Documents do not constitute usurious or
otherwise unlawful interest. 
 (H) The steps necessary to perfect Lender’s interest in the collateral required to be
pledged pursuant to the terms of the Loan Documents. 
 (I) Any other opinions that Lender reasonably requests. 
 (7) A favorable opinion from counsel for Guarantor with respect to the following: 
 (A) Lyon is duly organized, validly existing and in good standing as a corporation under the laws of the State of California, is in good
standing in California and is duly qualified to do business and in good standing in California and every other jurisdiction where its business or properties require qualification and has all requisite power and authority to own and operate its
properties and to carry on its business as now conducted. 
 (B) Guarantor has the power and authority to execute and deliver,
and perform its obligations under, the Guaranty and the Environmental Indemnity. 
  

 A - 2 

 (C) The execution, delivery and performance by Guarantor of the Guaranty and the
Environmental Indemnity have been duly authorized by all necessary action and does not and will not (i) contravene the Articles of incorporation or bylaws or other formation documents of Lyon; (ii) contravene any law, rule or regulation
or, to counsel’s knowledge, any order, writ, judgment, injunction or decree or any contractual restriction binding on or affecting Guarantor; (iii) require any approval or consent of any member or any other Person other than approvals or
consents that have been previously obtained and disclosed in writing to Lender; (iv) to counsel’s knowledge, result in a breach of or constitute a default under any indenture or loan or credit agreement or any other agreement, lease or
instrument to which Guarantor is a party or by which Guarantor or any of its properties may be bound or affected; or (v) to counsel’s knowledge (after due investigation), result in, or require the creation or imposition of, any lien of any
nature (other than the contemplated liens) upon or with respect to any of the properties now owned or hereafter acquired by Guarantor; and, to counsel’s knowledge, Guarantor is not in default under any such law, rule, regulation, order, writ,
judgment, injunction, decree or contractual restriction or any such indenture, agreement, lease or instrument. 
 (D) The
Guaranty and the Environmental Indemnity has each been duly executed and delivered and constitutes the legal, valid and binding obligations of Guarantor enforceable in accordance with its terms. 
 (E) No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is
required for the due execution, delivery and performance by Guarantor of the Guaranty or the Environmental Indemnity any other document executed pursuant thereto or in connection therewith. 
 (F) To counsel’s knowledge, there is no pending or threatened action, suit, proceeding or arbitration against or affecting Guarantor
or any of its Affiliates before any court, governmental agency or arbitrator that, if adversely determined, would result in a Material Adverse Change. 
 (G) Any other opinions that Lender reasonably requests. 
 (8) Certified copies of the
Articles of Organization and Operating Agreement (and all amendments thereto), and originals of Certificates of Good Standing for Borrower, each of its co-managing members. 
 (9) Certified copies of the Articles of Incorporation, Bylaws (and all amendments thereto), and an original Certificate of Good Standing
for each sole member and/or managing member, as applicable, of Lyon and each co-managing member of Borrower. 
  

 A - 3 

 (10) Copies of the resolutions for Borrower authorizing Borrower to obligate itself with
respect to the Loan and authorizing certain officers to execute and deliver this Loan Agreement and the other Loan Documents. 
 (11) Copies of the resolutions authorizing Lyon to obligate itself with respect to (and authorizing certain officers to execute and deliver) the Guaranty and the applicable Environmental Indemnity. 
 (12) Payment of all costs and expenses incurred by Lender, including, without limitation, the fees and costs of its legal counsel, in
connection with the preparation, execution and delivery of this Loan Agreement and the other Loan Documents. 
 (13) Execution
and delivery to the Agency a completion guaranty sufficient to eliminate any restrictions on the ability of Borrower to obtain building permits for Homes to be constructed on the Land based on the status of development or construction of the Rental
Affordable Housing. 
 (14) Copy of the Payment and Performance Agreement by and between Borrower and the County of Monterey.

 (15) Copies of the Affordable Housing MOAs, Laguna Seca events access plan and all other instruments executed by Borrower,
any Guarantor or any Affiliate of any of them in connection with the Project. 
 (16) Copies of the Section 2081 Permit
issued by the California Fish and Game Commission, United States of American Army Right of Entry License and all other permits and licenses issued in connection with the Project. 
 (17) Copies of the Incidental Take Permit, Right of Entry License and all other permits and licenses issued in connection with the
Project. 
 (18) Evidence satisfactory to Lender of Borrower’s equity contribution of no less than Ten Million Two
Hundred Thousand Dollars ($10,200,000). 
  

 A - 4 

 EXHIBIT B 
 PROJECT UNDERWRITING DOCUMENTS 
  

	A.	GENERAL PROJECT INFORMATION: 

  

	 	1.	Summary description of the Project and any proposed Phase. 

  

	 	2.	Purchase contract(s) for the Land. 

  

	 	3.	Cash flow analysis, which includes the Budget (including breakdown between Land acquisition costs and costs of the Development Work and Construction Progress Schedule).

  

	 	4.	Market report supporting absorption rates and information on home product. 

  

	 	5.	Appraisal Report setting forth a Value for the Project and any proposed Phase. 

  

	 	6.	Preliminary title report, including copies of all documents relating to exceptions. 

  

	B.	DEVELOPMENT INFORMATION AND DOCUMENTS: 

  

	 	1.	Site plan. 

  

	 	2.	Map of Project and any proposed Phase 

  

	 	3.	Evidence of site plan approval and proper zoning. 

  

	 	4.	ALTA Survey. 

  

	 	6.	Phase 1 environmental report, other reports and/or letters indicating the Land is free and clear of hazardous materials and unexploded ordnance. 

  

	 	7.	Soils report. 

  

	 	8.	Letters regarding utility availability. 

  

	 	9.	Evidence of Borrower’s ability to satisfy the conditions of the site plan approval. 

  

	C.	PROJECT LEGAL DOCUMENTS 

  

	 	1.	Proposed CC&R’s, when available, or recorded CC&R’s. 

  

	 	2.	If a condominium, or otherwise applicable, a copy of the homeowner’s association articles of incorporation, by-laws and budget. 

  

 B - 1 

 EXHIBIT C 
 FORM OF DRAW REQUEST CERTIFICATION 
 DRAW REQUEST NUMBER 
 DATE:                      ,
20     
 LENDER: RESIDENTIAL FUNDING COMPANY, LLC, a Delaware limited liability company 
 BORROWER: EAST GARRISON PARTNERS I, LLC, a California limited liability company 
 PROJECT: East Garrison 
 Reference is made to that certain Loan Agreement dated as of January 30, 2007, between Lender and
Borrower relating to the above referenced Project (as amended or otherwise modified from time to time, the “Loan Agreement”). Capitalized terms used herein without definition have the meanings set forth in the Loan Agreement,
unless the context requires otherwise. 
 Borrower requests Lender to disburse to Borrower the proceeds of the Loan in the amounts and for
the purposes stated in the attached Schedule 1. 
 In connection with the requested disbursement, Borrower hereby represents, warrants
and certifies to Lender as follows: 
 (1) No Event of Default or Potential Default presently exists under the Loan Agreement
or any other Loan Document. 
 (2) All of the representations and warranties of Borrower and Guarantor under the Loan
Agreement and the other Loan Documents are hereby remade and restated. 
 (3) With respect to the Loan: 
 (A) Borrower has satisfied all conditions precedent to the funding of the Project as set forth in the Loan Documents; 
 (B) the Loan Documents are in full force and effect; 
 (C) the Loan is secured by a first-priority lien on the Project and the other collateral described in the Loan Documents; 
 (D) the sum of all amounts expended in respect of the acquisition of the Land and the Development Work does not exceed the Budget, or if
such amounts do exceed the Budget, attached hereto is a listing of the amounts over budget and an explanation of such budget overrun(s); and 
  

 C - 1 

 (E) all contractors, subcontractors, vendors, materialmen and other Persons entitled to
payment with respect to the Development Work have been paid or will be paid, subject to retainage, with the proceeds of the requested disbursement. 
 (4) All insurance required to be maintained by Borrower remains in full force in effect, of the types, in the amounts and issued by insurers as previously approved by Lender. 
 (5) All Development Work covered by this Draw Request has been completed in accordance with the applicable contracts and should now be
paid, and all costs incurred in connection with the Development Work either have been paid or will be paid out of the proceeds of this disbursement. 
  

			
	 BORROWER:

	
	 EAST GARRISON PARTNERS I, LLC,
 a California limited liability company

		
	 By:
	 	  

		 	Lyon representative
		
	 By:
	 	  

		 	Woodman representative

  

 D - 2 

 EAST GARRISON 
 SCHEDULE 1 TO DRAW REQUEST NUMBER 

 EXHIBIT D 
 CONSTRUCTION PROGRESS SCHEDULE 
  

 D - 1 

 EXHIBIT E 
 PROJECT BUDGET 
  

 E - 1 

 EXHIBIT F 
 FORM OF PHASE COMMITMENT 
  

 F - 1 

 EXHIBIT G 
 SCHEDULE OF MINIMUM REQUIRED PAYMENTS PER LOT/SCHEDULED 
 RELEASE PRICE 
  

 G - 1 

 EXHIBIT H 
 PHASE DEPICTIONS 
  

 H - 1 

 EXHIBIT I 
 LYON REPRESENTATIVES 
  

			
	Wade Cable	 	Douglas Bauer
	Lyon East Garrison Company I, LLC	 	Lyon East Garrison Company I, LLC
	c/o William Lyon Homes, Inc.,	 	c/o William Lyon Homes, Inc.
	4490 Von Karman Avenue	 	4490 Von Karman Avenue
	Newport Beach, California 92660	 	Newport Beach, California 92660
	Telephone No.: (949) 476-5410	 	Telephone No.: (949) 476-5468
	Facsimile No.: (949) 252-2505	 	Facsimile No.: (949) 252-2568

  

			
	Mike Grubbs	 	Rick Robinson
	East Garrison Partners I, LLC	 	East Garrison Partners I, LLC
	c/o William Lyon Homes, Inc.	 	c/o William Lyon Homes, Inc.
	4490 Von Karman Avenue	 	4490 Von Karman Avenue
	Newport Beach, California 92660	 	Newport Beach, California 92660
	Telephone No.: (949) 476-5475	 	Telephone No.: (949) 476-5226
	Facsimile No.: (949) 252-2575	 	Facsimile No.: (949) 252-2575

  

			
	Mike McMillen	 	Greg Mix
	East Garrison Partners I, LLC	 	East Garrison Partners I, LLC
	c/o William Lyon Homes, Inc.	 	c/o William Lyon Homes, Inc.
	15850 Concord Circle, Suite B	 	2603 Camino Ramon, Suite 150
	Morgan Hill, CA 95037	 	San Ramon, CA 94583
	Telephone No.: (408) 201-7702	 	Telephone No.: (925) 543-5533
	Facsimile No.: (408) 778-8802	 	Facsimile No.: (925) 543-6918

  

			
		 	Mark Sherman
		 	East Garrison Partners I, LLC
	 and
	 	c/o William Lyon Homes, Inc.
		 	15850 Concord Circle, Suite B
		 	Morgan Hill, CA 95037
		 	Telephone No.: (408) 201-7701
		 	Facsimile No.: (408) 778-8801

  

 I - 1

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