Document:

Fifth Amendment to Amended and Restated Revolving Line of Credit Loan Agreement

 Exhibit 10.4 
 

 
 FIFTH AMENDMENT TO AMENDED AND 
 RESTATED REVOLVING LINE OF CREDIT LOAN AGREEMENT 
 THIS FIFTH AMENDMENT TO
AMENDED AND RESTATED REVOLVING LINE OF CREDIT LOAN AGREEMENT (“Agreement”), dated as of May 20, 2008, by and between WILLIAM LYON HOMES, INC., a California corporation (“Borrower”), and CALIFORNIA
BANK & TRUST, a California banking corporation (“Lender”), with reference to the following facts: 
 RECITALS 
 A. Borrower originally agreed to borrow a sum not to exceed Fifty Million Dollars ($50,000,000.00)
(as the same has been and may be further amended from time to time, “Loan”) from Lender for the purpose of providing Borrower with funding for the acquisition and development of residential lots, the construction of existing and
future residential home projects, and the issuance of letters of credit for the payment of costs incurred or associated with said projects. The terms and conditions of the Loan are more particularly set forth in that certain Amended and Restated
Revolving Line of Credit Loan Agreement (Borrowing Base Loan) dated as of September 16, 2004, by and between Borrower and Lender (as the same has been and may be further amended from time to time, “Loan Agreement”). All
capitalized terms not specifically defined herein shall have the meanings given to such terms in the Loan Agreement. 
 B. The Loan is
evidenced by that certain Sixth Amended and Restated Construction Loan Promissory Note (Construction Revolving Line of Credit) dated as of December 28, 2007, given by Borrower to Lender (as the same has been and may be further amended from time
to time, “Current Note”). 
 C. The Loan is secured by, among other things, the “Deed of Trust” (as
defined in the Loan Agreement). 
 D. This Agreement, the Current Note and the other documents evidencing or relating to the Loan
collectively shall be referred to as the “Loan Documents.” 
 E. Borrower has requested that Lender modify the Loan
by, among other things, decreasing (i) the maximum amount of the Loan, (ii) the maximum “Commitment Amount” (as defined in the Loan Agreement), and (iii) the face amount of the Current Note, from Fifty Million Dollars
($50,000,000.00) to Thirty-Five Million Dollars ($35,000,000.00) (“New Commitment Amount”). 
 F. Lender is willing
to consent to the modifications to the Loan Documents set forth herein, subject to the conditions set forth below. The date on which all conditions in this Agreement have been satisfied shall be referred to as the “Modification Closing
Date.” 
  

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 TERMS AND CONDITIONS 
 NOW, THEREFORE, in consideration of the foregoing premises and other valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows: 
 1. Recitals. The preamble, recitals and any exhibits hereto are
hereby incorporated into this Agreement. 
 2. Decrease in the Loan Amount. 
 2.1 Decrease in the Maximum Commitment Amount. From and after the Modification Closing Date, the maximum amount of
the Loan and the maximum Commitment Amount are hereby decreased from the current amount of Fifty Million Dollars ($50,000,000.00) to the New Commitment Amount of Thirty-Five Million Dollars ($35,000,000.00). All references in the Loan Documents to
the maximum amount of the Loan and maximum Commitment Amount shall be revised to refer to the New Commitment Amount set forth herein. 
 2.2 Amendment to Definition of Commitment Amount. The definition of “Commitment Amount” set forth in the Loan Agreement shall be replaced with the following: 
 “Commitment Amount” means (a) during the Initial Line Term, the sum of Thirty-Five Million Dollars ($35,000,000.00),
and (b) during the Reduction Period, beginning upon the last day of the first Calendar Quarter following the Initial Line Maturity Date, and on or prior to the last day of each Calendar Quarter thereafter during the Reduction Period, the
Commitment Amount shall be reduced in the minimum amount of Eight Million Seven Hundred Fifty Thousand Dollars ($8,750,000.00) (each, “Reduced Commitment Amount”): 
  

				
	 Date
	  	Reduced
Commitment Amount
	 Initial Line Maturity Date
	  	$	35,000,000.00
	 First Calendar Quarter
	  	$	26,250,000.00
	 Second Calendar Quarter
	  	$	17,500,000.00
	 Third Calendar Quarter
	  	$	8,750,000.00
	 Fourth Calendar Quarter
	  	$	0.00

 2.3 Decrease in the Amount of the Current Note. As a result of
the decrease in the amount of the Loan and the maximum Commitment Amount, the face amount of the Current Note shall be decreased from the current amount of Fifty Million Dollars ($50,000,000.00) to the New Commitment Amount of Thirty-Five Million
Dollars ($35,000,000.00) (“New Note Amount”). All references in the Loan Documents to the face amount of the Current Note shall be revised to refer to the New Note Amount set forth herein. 
 2.4 Amendment and Restatement of the Current Note. Borrower shall execute and deliver to Lender a Seventh Amended and
Restated Promissory Note of even date herewith (the Current Note, as amended by said document, shall hereafter be referred to as the “Note”) evidencing the decrease in the amount of the Loan and the maximum Commitment Amount as
described herein. All references in the Loan Documents to the Current Note shall be revised to refer to the Note, as amended and restated. 
  

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 3. Maximum Aggregate Loan Allocation(s). New
Definitions. The definition of Maximum Aggregate Loan Allocation(s) in Section 1.1 of the Loan Agreement shall be replaced with the following: 
 “Maximum Aggregate Loan Allocation(s)” shall mean each and every one of the following: 
 (a) With respect to all Qualified Projects included in the Borrowing Base (collectively or individually “Geographic
Concentration Limitation”): 
 (1) The aggregate Loan Allocations for all Lots and/or Homes for Qualified
Projects (whether Advances have been made and/or have been committed but have not yet advanced) located in the State of Arizona shall not exceed the sum of Ten Million Five Hundred Thousand Dollars ($10,500,000.00); and/or 
 (2) The aggregate Loan Allocations for all Lots and/or Homes for Qualified Projects (whether Advances have been made and/or have
been committed but have not yet advanced) located in the State of Nevada shall not exceed the sum of Ten Million Five Hundred Thousand Dollars ($10,500,000.00). 
 (b) With respect to all Lots to be included in the Borrowing Base, the aggregate Loan Allocations for all Entitled Land, Lots Under
Development and Developed Lots for all Qualified Projects (whether Advances have been made and/or have been committed but have not yet advanced) shall not exceed the sum of Fourteen Million Dollars ($14,000,000.00) (“Lot Concentration
Limitation”). 
 (c) With respect to all Spec Homes to be included in the Borrowing Base (“Spec Home
Concentration Limitation”): 
 (1) For all Projects financed hereunder, the aggregate Loan Allocations for
all Spec Homes for all Projects (whether Advances have been made and/or have been committed but have not yet advanced) shall not exceed the sum of Eight Million Four Hundred Thousand Dollars ($8,400,000.00); and/or 
 (2) For each and every Project financed hereunder, the total number of Spec Homes shall not exceed the greater of (A) eight
(8), (B) four (4) months’ appraised absorption for the Project, or (C) four (4) months’ actual absorption for the subject Project, as determined by Lender from time to time based upon the actual prior six-month Home
sales average for said Project. 
 4. Amendment to Letter of Credit Definitions in Loan Agreement. The definitions of Letter of
Credit Line, LOC Maximum Commitment Amount, and LOC Total Commitment Amount in Section 1.1 of the Loan Agreement shall be replaced with the following:  
 “Letter of Credit Line” shall mean that certain line of credit to be provided under the Loan for the purposes set forth
in Section 2.3 of this Agreement, which line of credit shall not exceed at any time the sum of Four Million Two Hundred Thousand Dollars ($4,200,000.00) (“LOC Total Commitment Amount”). The Letter of Credit Line shall be a
revolving line of credit. Prior to the Maturity Date, the Letter of Credit Line may be drawn, repaid and drawn again through individual Advances in repetition, subject to the limitations herein, so long as: 
 (1) The sum of (a) the amounts outstanding on the Letter of Credit Line, and (b) the cumulative Letter of Credit Line
amounts that are committed but not yet advanced on the Letter of Credit Line, never exceed the LOC Total Commitment Amount; and 
  

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 (2) The sum of (a) the amounts outstanding on the Loan, and (b) the
cumulative Loan amounts that are committed but not yet advanced on the Loan, never exceed the Commitment Amount; and 
 (3)
No Event of Default has occurred and is continuing. 
 Upon the Maturity Date, if the Loan is not renewed as provided herein, the Letter
of Credit Line shall be repaid during the Reduction Period as set forth herein. 
 “LOC Maximum Commitment
Amount” shall mean the amount committed under each Letter of Credit, which sum shall not exceed the sum equal to (a) Four Million Two Hundred Thousand Dollars ($4,200,000.00), less (b) any committed portion of the Letter of
Credit Line that Borrower has requested and Lender has approved in its discretion be available for disbursement under the Loan. 
 “LOC Total Commitment Amount” shall mean the sum of all amounts committed under any Letters of Credit issued hereunder plus all Letter of Credit Advances in the aggregate, which sum shall not exceed Four Million Two Hundred
Thousand Dollars ($4,200,000.00). 
 5. Amendment to Definition of Maximum Allowed Advance for The Court Project. 

5.1 From and after the Modification Closing Date, the definition of Maximum Allowed Advance in Section 1.1 of the Loan
Agreement shall have the following meanings, solely with regard to the “Qualified Project” (as defined in the Loan Agreement) known as “The Court” or “360 @ South Bay” (“The Court Project”).

 “Maximum Allowed Advance” shall have the following meanings: 
  

	 	•	 	 Developed Lots: The sum of all Advances and Reserved Allocations committed but not disbursed for said Lots shall not exceed the lesser of (i) sixty
percent (60%) of Total Project Costs, or (ii) sixty percent (60%) of the Bulk Finished Lot Value for said Lots, subject to Lender’s approval. 

  

	 	•	 	 Spec Homes: The sum of all Advances and Reserved Allocations committed but not disbursed for said Homes shall not exceed the lesser of (i) sixty-five
percent (65%) of Total Project Costs, or (ii) sixty-five percent (65%) of the Base Appraisal for said Homes, subject to Lender’s approval. 

 5.2 Solely with regard to The Court Project: (a) all model “Units” (as defined in the Loan Agreement), Units
225, 227, 229, and 230 (Building 66), located on Lot 9 of the Property, shall be classified as Spec Homes; and (b) all Undesignated Units, Units 226 and 228 (Building 66), located on Lot 9 of the Property, all Spec Units, Units 1 through 6,
inclusive (Building 14), and Units 7 and 8 (Building 13), located on Lot 4 of the Property, and all finished “Lots” (as defined in the Loan Agreement), Units 9 through 12, inclusive (Building 13), Units 19 through 24, inclusive
(Building 12), and Units 25 through 30, inclusive (Building 11), located on Lot 4 of the Property, shall be classified as Developed Lots. 
  

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 5.3 Notwithstanding the foregoing, upon Lender’s receipt, review and approval
of an updated “Appraisal” (as defined in the Loan Agreement) for The Court Project, the amendments to the definition of Maximum Allowed Advance set forth in Section 5.1 above shall not be applicable, the current definition of
Maximum Allowed Advances shall be utilized, and the Maximum Allowed Advances shall be reduced in two and one-half percent (2.5%) increments, with full removal of The Court Project from the “Borrowing Base” (as defined in the
Loan Agreement) on or before June 30, 2009. Accordingly, upon Lender’s receipt, review and approval of an updated Appraisal for The Court Project, the sum of all Advances and Reserved Allocations committed but not disbursed for the
Developed Lots and Spec Homes, respectively, shall not exceed the amounts set forth in, and shall be subject to, the following schedule: 
  

							
	 Date
	  	LTV for Developed Lots	 	 	LTV for Spec Homes	 
	 Upon Lender’s receipt of updated Appraisal
	  	70.0	%	 	75.0	%
	 9/30/08
	  	67.5	%	 	72.5	%
	 12/31/08
	  	65.0	%	 	70.0	%
	 3/31/09
	  	62.5	%	 	67.5	%
	 6/30/09
	  	0	%	 	0	%

 The definition of Maximum Allowed Advance with regard to any other “Project” (as
defined in the Loan Agreement) or Qualified Project, other than The Court Project, shall not be modified or changed in any way. 
 6.
Amendment to Deed of Trust. Each Deed of Trust shall be amended to secure the obligations under the Note and the other Loan Documents, as amended herein. 
 7. Conditions Precedent. In no event shall Lender have any obligation to close this transaction unless and until all of the following conditions are satisfied: 
 7.1 No Defaults. There shall be no: (a) uncured, material default hereunder or under the Loan Documents;
(b) continuing representation, covenant or warranty hereunder or under the Loan Documents that is false or misleading in any manner; and (c) event currently existing which, with the passage of time, will result in a material default or the
falsity of any continuing representation, covenant or warranty hereunder or under the Loan Documents. 
 7.2 No
Financial Change. There has been no material adverse change in Borrower’s, financial condition since the closing of the Loan. 
 7.3 Payment Of Lender’s Costs. Borrower shall pay all of Lender’s costs and expenses incurred in connection with the documentation and closing of the modifications to the Loan Documents
described herein, including without limitation all attorneys’ fees and other closing fees and costs. 
 7.4
Additional Documents. Lender shall have received all additional documents executed by Borrower, as required by Lender in connection with this Agreement, including, without limitation, the Note and all Recorded Amendments. 
  

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 8. Representations and Warranties. Borrower hereby represents and warrants to Lender as
follows: 
 8.1 No Default. No default or event of default under any of the Loan Documents has occurred that
remains uncured, and no event has occurred which, with the giving of notice or the passage of time, or both, would constitute a default or an event of default under any of the Loan Documents. 
 8.2 Representations and Warranties. As of the date hereof, all of the warranties and representations contained in all of the
Loan Documents remain true, correct, complete and accurate. 
 8.3 No Claims or Defenses. As of the date hereof,
neither Borrower nor its managing member has any claims against Lender nor defenses to the enforcement of any of the Loan Documents in accordance with their respective terms, as amended by this Agreement. 
 8.4 Financial Covenants. Borrower acknowledges and agrees that the financial covenants contained in the Loan Documents are
in full force and effect and shall be monitored by Lender based on the financial reports to be provided under the Loan Agreement. 
 8.5 Satisfaction of Conditions. All of the conditions precedent set forth above have been fully satisfied. 
 9.
Further Assurances. Borrower agrees to perform such other and further acts, and to execute such additional documents, agreements, notices or financing statements, as Lender deems necessary or desirable from time to time to create,
preserve, continue, perfect, validate or carry out any of Lender’s rights under this Agreement and the other Loan Documents. 
 10.
Integration. All rights, remedies, powers and interest provided for Lender herein are in addition to the rights, remedies, powers and interests provided for Lender in the Loan Documents, the terms and provisions of which are incorporated
herein by this reference and made a part hereof. If and to the extent any term or provision hereof is inconsistent with any term or provision of the Loan Documents, the term or provision of this Agreement shall prevail. 
 11. Entire Agreement; Amendments. This Agreement and the other Loan Documents contain the entire agreement between Borrower and Lender with
respect to the Loan Documents, and all prior negotiations, commitments, understandings and agreements are superseded by this Agreement and the Loan Documents. No amendment, modification, supplement, extension, termination or waiver of any provision
of this Agreement, any Loan Document, or any other agreement executed in connection with any of the foregoing shall be effective unless in writing and signed by Lender and Borrower, and then only in the specific instance and for the specific purpose
given. 
 12. Governing Law. The Loan Documents shall be governed by, and construed and enforced in accordance with, the
internal laws of the State of California, without regard to its conflict of laws principles. 
 13. Section Headings. The
section headings of this Agreement are included for convenience only, and shall not affect the construction or interpretation of any provision of this Agreement. 
 14. Attorneys’ Fees. If any action or other proceeding is brought to interpret or enforce any provision of this Agreement, the prevailing party shall be entitled to recover attorneys’ fees and
expenses. 
  

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 15. Binding Effect. This Agreement and the other Loan Documents shall be binding upon, and
shall inure to the benefit of, Borrower and Lender and their respective successors and assigns, or heirs and personal representatives, as applicable, subject to any provision of the Loan Documents restricting transfers of the Property. 

16. Severability of Provisions. No provision of this Agreement or any other Loan Document that is held to be inoperative, unenforceable
and invalid shall affect the remaining provisions, and this and all provisions of this Agreement and the Loan Documents are hereby declared to be severable. 
 17. Miscellaneous. No reference to this Agreement is necessary in any instrument or document at any time referring to the Loan Documents. A reference to the Loan Documents shall be deemed a reference to
such document as modified hereby. 
 18. No Commitment. The furnishing of this Agreement and other modification documents shall
in no way be construed as a commitment by Lender to modify, amend, extend or otherwise alter the Loan Documents. Lender shall be under no obligation to close the transaction evidenced by this Agreement unless this Agreement and all related documents
are returned to Lender fully executed by Borrower, and unless this Agreement is actually executed by Lender and delivered to Borrower. 
 19. No Other Amendments. Except as expressly amended herein, the Loan Agreement, and all of the other Loan Documents remain unmodified and in full force and effect. 
 20. Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto on separate counterparts,
each of which, when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument. 
 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 
  

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 IN WITNESS WHEREOF, this Agreement has been executed by Borrower and Lender as of the date first above
written. 
  

			
	BORROWER:
	
	WILLIAM LYON HOMES, INC., a California corporation
		
	By: 	 	 /s/ Douglas F. Bauer 

	Name:	 	Douglas F. Bauer
	Title:	 	President
		
	By: 	 	/s/ Michael D. Grubbs
	Name: 	 	Michael D. Grubbs
	Title:	 	Senior Vice President
	
	LENDER:
	
	CALIFORNIA BANK & TRUST, a California banking corporation
		
	By: 	 	/s/ James A. Lehmkuhl
	Name: 	 	James A. Lehmkuhl
	Its:	 	Vice President

  

 8Eighth Modification Agreement to Borrowing Base Revolving Line of Credit Agrmt.

 EXHIBIT 10.6 
 EIGHTH MODIFICATION AGREEMENT TO BORROWING BASE REVOLVING 
 LINE OF CREDIT AGREEMENT 
  

					
	DATE:	  	June 5, 2008	  	 
			
	 PARTIES:
	  		  	
		  	Borrower:	  	WILLIAM LYON HOMES, INC., a California corporation
			
		  	Guarantor:	  	WILLIAM LYON HOMES, a Delaware corporation
			
		  	Bank:	  	JPMORGAN CHASE BANK, N.A. (successor by merger to Bank One, NA (Main Office Chicago, Illinois)), a national banking association

 JPMORGAN CHASE BANK, N.A. (successor by merger to Bank One, NA (Main Office Chicago, Illinois)), a national
banking association (“Bank”), and WILLIAM LYON HOMES, INC., a California corporation (“Borrower”), hereby enter into this Eighth Modification Agreement to Borrowing Base Revolving Line of Credit Agreement (the
“Modification”) to the Borrowing Base Revolving Line of Credit Agreement dated as of June 28, 2004, as modified by a Modification Agreement, dated as of December 7, 2004, by a Second Modification Agreement to Borrowing
Base Revolving Line of Credit Agreement, dated as of July 14, 2005, by a Third Modification Agreement to Borrowing Base Revolving Line of Credit Agreement, dated as of October 23, 2006, by a Fourth Modification Agreement to Borrowing Base
Revolving Line of Credit Agreement, dated as of April 26, 2007, by a Fifth Modification Agreement to Borrowing Base Revolving Line of Credit Agreement, dated as of November 6, 2007, by a Sixth Modification Agreement to Borrowing Base
Revolving Line of Credit Agreement, dated as of February 20, 2008, and by a Seventh Modification Agreement to Borrowing Base Revolving Line of Credit Agreement, dated as of March 12, 2008 (the “Loan Agreement”), with the
consent of guarantor WILLIAM LYON HOMES, a Delaware corporation (“Guarantor”). 
 RECITALS 
 A. Bank has extended to Borrower credit (“Loan”) up to the maximum principal amount of Seventy Million Dollars ($70,000,000) pursuant to
the Loan Agreement, as presently evidenced by that certain Amended and Restated Promissory Note dated as of July 14, 2005 (the “Note”) executed by Borrower and payable to the order of Bank. 
 B. The Loan is secured by, among other things, certain Construction Deeds of Trust and Fixture Filing (With Assignment of Rents and Security Agreement)
executed by Borrower as Trustor for the benefit of Bank (such Deeds of Trust, as 

  

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amended to dated, shall be hereinafter referred to, individually, as a “Deed of Trust” and, collectively, as the “Deeds of
Trust”). The Loan is further secured by the personal property described in certain UCC-1 Financing Statements relating to the property encumbered by the Deeds of Trust naming Borrower as Debtor and Bank as Secured Party (as amended to date,
the “UCC Financing Statements”). The Deeds of Trust, the UCC Financing Statements, and such other agreements, documents and instruments securing the Loan are referred to individually and collectively as the “Security
Documents”). 
 C. Repayment of the Loan and the completion of the improvements have been, and continue to be, guaranteed by the
Repayment Guaranty dated as of June 28, 2004 and executed by Guarantor in favor of Bank (the “Guaranty”). The Guaranty and any other agreements, documents and instruments guarantying the Loan are referred to individually and
collectively as the “Guaranty Documents”. 
 D. The Loan Agreement, the Note, the Security Documents, the Guaranty
Documents, any environmental certification and indemnity agreement, and all other agreements, documents, and instruments evidencing, securing, or otherwise relating to the Loan, as may be amended, modified, extended or restated from time to time,
are sometimes referred to individually and collectively as the “Loan Documents”. Hereinafter, the Loan Documents shall mean such documents as modified in this Modification. 
 E. The Borrower and the Bank have agreed to modify the Loan as provided herein. 
 F. All capitalized terms used herein and not otherwise defined shall have the meanings given to such terms in the Loan Agreement. 
 AGREEMENT 
 For good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, Borrower and Bank agree as follows: 
 1. ACCURACY OF RECITALS.

 Borrower acknowledges the accuracy of the Recitals. 
 2. MODIFICATION OF LOAN DOCUMENTS. 
 2.1 The Commitment Amount is hereby reduced from $70,000,000 to $50,000,000. In no event shall
the Bank be obligated to make any disbursement of the Loan which would cause the outstanding principal balance of the Loan to exceed the Commitment Amount, as reduced hereby. 
 2.2 The Facility LC Sublimit is hereby reduced from $10,000,000 to $5,000,000. In no event shall the Bank be obligated to issue or Modify any Facility LC
if 

  

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the issuance or Modification of any such Facility LC would cause the aggregate amount of the outstanding LC Obligations to exceed the Facility LC Sublimit,
as reduced hereby. 
 2.3 Notwithstanding any provision in the Loan Agreement or in any other Loan Document to the contrary, with respect to
the Approved Subdivision commonly known as “Altair,” which was approved as an Approved Subdivision pursuant to that certain Project Loan Addendum (the “Altair Project Loan Addendum”), dated as of June 26, 2007:

 (a) The MFR A&D Lots in such Approved Subdivision may be included in the Borrowing Base as Eligible Collateral for a
term of thirty-six (36) Calendar Months from the original Lot Eligibility Date for such A&D Lots. 
 (b) The MFR
Model Units in such Approved Subdivision may be included in the Borrowing Base as Eligible Collateral for a term of thirty-six (36) Calendar Months from the original Unit Eligibility Date for such Model Units. 
 (c) The Mandatory Lot Commitment Reduction Schedule attached as Exhibit B to the Altair Project Loan Addendum is hereby
amended and restated in it entirety by the Revised Mandatory Lot Commitment Reduction Schedule attached hereto as Schedule 1. 
 2.4
Notwithstanding any provision in the Loan Agreement or in any other Loan Document to the contrary, with respect to the Approved Subdivision commonly known as “Rosabella at Shady Trails,” which was approved as an Approved Subdivision
pursuant to that certain Project Loan Addendum (the “Rosabella Project Loan Addendum”), dated as of April 3, 2006: 
 (a) The MFR A&D Lots in such Approved Subdivision may be included in the Borrowing Base as Eligible Collateral for a term of forty-five (45) Calendar Months from the original Lot Eligibility Date for such
A&D Lots. 
 (b) The MFR Model Units in such Approved Subdivision may be included in the Borrowing Base as Eligible
Collateral for a term of thirty-six (36) Calendar Months from the original Unit Eligibility Date for such Model Units. 
 (c) The Mandatory Lot Commitment Reduction Schedule attached as Exhibit B to the Rosabella Project Loan Addendum is hereby amended and restated in it entirety by the Revised Mandatory Lot Commitment Reduction Schedule attached
hereto as Schedule 2. 
 2.5 Notwithstanding any provision in the Loan Agreement or in any other Loan Document to the contrary, with
respect to the Approved Subdivision commonly known as “Tradition at Arboreta,” which was approved as an Approved Subdivision pursuant to that certain Project Loan Addendum (the “Arboreta Project Loan Addendum”), dated as
of November 28, 2007, the Mandatory Lot Commitment Reduction Schedule attached as Exhibit B to the Arboreta Project Loan Addendum is 

  

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hereby amended and restated in it entirety by the Revised Mandatory Lot Commitment Reduction Schedule attached hereto as Schedule 3. 
 2.6 Notwithstanding any provision in the Loan Agreement or in any other Loan Document to the contrary, with respect to the Approved Subdivision commonly
known as “Tramonto,” which was approved as an Approved Subdivision pursuant to that certain Project Loan Addendum (the “Tramonto Project Loan Addendum”), dated as of October 7, 2005, the Mandatory Lot Commitment
Reduction Schedule attached as Exhibit B to the Tramonto Project Loan Addendum is hereby amended and restated in it entirety by the Revised Mandatory Lot Commitment Reduction Schedule attached hereto as Schedule 4. 
 2.7 Notwithstanding any provision in the Loan Agreement or in any other Loan Document to the contrary, with respect to the Approved Subdivision commonly
known as “The Lofts,” which was approved as an Approved Subdivision pursuant to that certain Project Loan Addendum (the “Lofts Project Loan Addendum”), dated as of June 20, 2007: 
 (a) Each of the MFR Spec Units in such Approved Subdivision included in the Borrowing Base, other than the MFR Spec Units identified as
Unit Nos. 333, 334 and 335, are hereby converted from MFR Spec Units to MFR A&D Lots and shall continue to be included in the Borrowing Base as MFR A&D Lots. The MFR Spec Units in such Approved Subdivision included in the Borrowing Base
which are identified as Unit Nos. 333, 334 and 335 shall continue to be included in the Borrowing Base as MFR Spec Units. 
 (b) The Maximum Allowed Advance for each MFR A&D Lot in such Approved Subdivision included in the Borrowing Base is hereby reduced to the lesser of (i) 50% of the “bulk wholesale as-if complete” value of such Approved
Subdivision divided by the total number of Lots in such Approved Subdivision (regardless of whether such total number of Lots are Eligible Collateral), or (ii) 50% of the Total Lot Cost for such Approved Subdivision divided by the total number
of Lots in such Approved Subdivision (regardless of whether such total number of Lots are Eligible Collateral). 
 (c) The
Maximum Allowed Advance for each MFR Spec Unit in such Approved Subdivision included in the Borrowing Base is hereby reduced to the lesser of (i) 60% of the Appraised Value for that Unit or (ii) 60% of the Unit Cost for that Unit.

 (d) The Maximum Allowed Advance for each MFR Model Unit in such Approved Subdivision included in the Borrowing Base is
hereby reduced to the lesser of (i) 60% of the Appraised Value for that Unit or (ii) 60% of the Unit Cost for that Unit. 
 (e) From and after the date of this Modification, Borrower shall no longer be required to comply with the Mandatory Lot Commitment Reduction 

  

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Schedule attached as Exhibit B to the Lofts Project Loan Addendum, and such Mandatory Lot Commitment Reduction Schedule shall no longer be of any
force or effect. 
 (f) The MFR A&D Lots in such Approved Subdivision may be included in the Borrowing Base as Eligible
Collateral for a term of twenty-four (24) Calendar Months from the original Lot Eligibility Date for such MFR A&D Lots. 
 (g) The MFR Model Units in such Approved Subdivision may be included in the Borrowing Base as Eligible Collateral for a term of twenty-four (24) Calendar Months from the original Unit Eligibility Date for such MFR Model Units.

 (h) The MFR Spec Units in such Approved Subdivision may be included in the Borrowing Base as Eligible Collateral for a
term of twenty-four (24) Calendar Months from the original Unit Eligibility Date for such MFR Spec Units. 
 2.8 The Deeds of Trust are
modified to secure payment and performance of the Loan as amended to date, in addition to all other “Obligations” of Borrower as therein defined. The foregoing notwithstanding, certain obligations continue to be excluded from the
Obligations, as provided in the Deeds of Trust. 
 2.9 Each of the Loan Documents is modified to provide that it shall be a default or an
event of default thereunder if Borrower shall fail to comply with any of the covenants of Borrower herein or if any representation or warranty by Borrower herein or by any guarantor in any related Consent and Agreement of Guarantor is materially
incomplete, incorrect, or misleading as of the date hereof. 
 2.10 Each reference in the Loan Documents to any of the Loan Documents shall
be a reference to such document as modified herein. 
 3. RATIFICATION OF LOAN DOCUMENTS AND COLLATERAL. 
 The Loan Documents are ratified and affirmed by Borrower and shall remain in full force and effect as modified herein. Any property or rights to or
interests in property granted as security in the Loan Documents shall remain as security for the Loan and the obligations of Borrower in the Loan Documents. 
 4. CONDITIONS PRECEDENT. 
 Before this Agreement becomes effective and any party becomes obligated under it, all of the
following conditions shall have been satisfied at Borrower’s sole cost and expense in a manner acceptable to Bank in the exercise of Bank’s sole judgment: 
 4.1 Bank shall have received fully executed and, where appropriate, acknowledged originals of this Modification, the attached consents signed by Guarantor, and any other documents which Bank may require or request in
accordance with this Agreement or the other Loan Documents. 
  

 5 

 4.2 Bank shall have received reimbursement, in immediately available funds, of all costs and expenses
incurred by Bank in connection with this Agreement, including charges for title insurance (including endorsements), recording, filing and escrow charges, fees for appraisal, architectural and engineering review, construction services and
environmental services, mortgage taxes, and legal fees and expenses of Bank’s counsel. Such costs and expenses may include the allocated costs for services of Bank’s in-house staffs, such as legal, appraisal, construction services and
environmental services. Borrower acknowledges that any extension and modification fees payable in connection with this transaction do not include the amounts payable by Borrower under this subsection. 
  

	 	5.	ENTIRE AGREEMENT, CHANGE, DISCHARGE, TERMINATION, OR WAIVER. 

 The Loan Documents as modified herein contain the entire understanding and agreement of Borrower and Bank in respect of the Loan and supersede all prior representations, warranties, agreements, arrangements, and
understandings. No provision of the Loan Documents as modified herein may be changed, discharged, supplemented, terminated, or waived except in a writing signed by Bank and Borrower. 
 6. BINDING EFFECT. 
 The Loan Documents as modified herein shall be binding upon, and inure to the
benefit of, Borrower and Bank and their respective successors and assigns. 
 7. CHOICE OF LAW. 
 This Agreement shall be governed by and construed in accordance with the laws of the State of California, without giving effect to conflicts of law
principles. 
 8. COUNTERPART EXECUTION. 
 This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same document. Signature pages may be detached from the counterparts and attached
to a single copy of this Agreement to physically form one document. 
 [Signatures on following page] 
  

 6 

 DATED as of the date first above stated. 
  

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

				
		 		 	By:	 	/s/ Richard S. Robinson
		 		 	Name:	 	Richard S. Robinson
		 		 	Title:	 	Senior Vice President
				
		 		 	By:	 	/s/ Michael D. Grubbs
		 		 	Name:	 	Michael D. Grubbs
		 		 	Title:	 	Senior Vice President

  

							
			
	BANK:	 		 	 JPMORGAN CHASE BANK, N.A.
 (successor by
merger to Bank One, NA
 (Main Office Chicago, Illinois)), a national
 banking association

				
		 		 	By:	 	/s/ Kimberlee Edwards
		 		 	Name:	 	Kimberlee Edwards
		 		 	Title:	 	Senior Vice President

  

 7 

 CONSENT AND AGREEMENT OF GUARANTOR 
 With respect to that certain Eighth Modification Agreement to Borrowing Base Revolving Line of Credit Agreement (hereinafter, the
“Modification”) between WILLIAM LYON HOMES, INC., a California corporation (“Borrower”), and JPMORGAN CHASE BANK, N.A. (successor by merger to Bank One, NA (Main Office Chicago, Illinois)), a national banking
association (“Bank”), to which this Consent is attached, the undersigned (“Guarantor”), hereby (i) ratifies and reaffirms all of its obligations to Bank under the Guaranty, (ii) consents to the execution
and delivery by Borrower of the attached Modification, and (iii) confirms that the Guaranty remains in full force and effect notwithstanding Borrower’s execution of the attached Modification. The undersigned agrees that the execution of
this Consent and Agreement of Guarantor (the “Consent”) is not necessary for the continued validity and enforceability of the Guaranty, but it is executed to induce Bank to enter into the Modification. 
 This Consent may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and
the same document. Signature pages may be detached from the counterparts and attached to a single copy of this Consent to physically form one document. Facsimile transmission of the signed original of this Consent or the retransmission of any signed
facsimile transmission will be deemed the same as delivery of an original. 
 IN WITNESS WHEREOF, Guarantor has executed this Agreement as of
the date set forth on the attached Eighth Modification Agreement. 
  

							
	“Guarantor”	 		 	 WILLIAM LYON HOMES,
 a Delaware corporation

				
		 		 	By:	 	/s/ Richard S. Robinson
		 		 	Name:	 	Richard S. Robinson
		 		 	Title:	 	Senior Vice President
				
		 		 	By:	 	/s/ Michael D. Grubbs
		 		 	Name:	 	Michael D. Grubbs
		 		 	Title:	 	Senior Vice President

  

 8 

 SCHEDULE 1 
 REVISED MANDATORY LOT COMMITMENT REDUCTION SCHEDULE 
 (ALTAIR) 
  

															
	Mandatory Lot Commitment Reduction Schedule
	Total Lots	  	65	  	Altair @ Padre Dam
	Total Lot Commitment/MAA per lot	  	$4,128,000	  	$63,507.69/Lot
	Reductions Start At End Of Month >>	  	12	  	Final Quarterly Reduction At End Of Month >>	  	36
	Appraised Absorption/
Required Qtrly Takedown (75% Appr. Abs)	  	8	  	6.00	  	$381,046 (Par Quarterly Reduction Amount)
	 Appraised Bulk Value
	  	$6,880,000	  	$105,846/Lot	  	Total Cost	  	$13,390,737	  	$206,011/Lot
	End of Month	  	Development & Marketing Period	  	% OF Par
Release Price	  	Reduction
Amount/Qtr	  	Lot
Sub-Commit.	  	Maximum
Lots With
Availability	  	Maximum
Advance Rates
	  	  	  	  	  	  	LTV	  	LTC
	 9
	  	Unit Construction Continues; Units
Begin to Close – 03/31/2008	  	0%	  	$0	  	$4,128,000	  	65	  	60%	  	31%
	 12
	  	Unit Construction Continues; Units
Begin to Close – 06/30/2008	  	125%	  	$476,308	  	$3,651,692	  	59	  	58%	  	30%
	 15
	  	Unit Construction Continues; Units
Begin to Close – 09/30/2008	  	125%	  	$476,308	  	$3,175,384	  	53	  	57%	  	29%
	 18
	  	Unit Construction Continues; Units
Begin to Close – 12/31/2008	  	125%	  	$476,308	  	$2,699,076	  	47	  	54%	  	28%
	 21
	  	Unit Construction & Closings
Continue – 03/31/2009	  	125%	  	$476,308	  	$2,222,768	  	41	  	51%	  	26%
	 24
	  	Unit Construction & Closings
Continue – 06/30/2009	  	125%	  	$476,308	  	$1,746,460	  	35	  	47%	  	24%
	 27
	  	Unit Construction & Closings
Continue – 09/30/2009	  	125%	  	$476,308	  	$1,270,152	  	29	  	41%	  	21%
	 30
	  	Unit Construction & Closings
Continue – 12/31/2009	  	125%	  	$476,308	  	$793,844	  	23	  	33%	  	17%
	 33
	  	Unit Construction & Closings
Continue – 03/31/2010	  	125%	  	$476,308	  	$317,536	  	17	  	18%	  	9%
	 36
	  	Unit Construction & Closings
Continue – 06/30/2010	  	83%	  	$317,536	  	0%	  	0	  	0%	  	0%

  

 SCHEDULE 1 

 SCHEDULE 2 
 REVISED MANDATORY LOT COMMITMENT REDUCTION SCHEDULE 
 (ROSABELLA AT SHADY TRAILS) 
  

															
	Mandatory Lot Commitment Reduction Schedule
	Total Lots	  	82	  	Rosabella at Shady Trails
	Total Lot Commitment/MAA per lot	  	$2,634,000	  	$32,122.00/Lot
	Reductions Start At End Of Month >>	  	15	  	Final Quarterly Reduction At End Of Month >>	  	45
	Appraised Absorption/
Required Qtrly Takedown (75% Appr. Abs)	  	9	  	8.00	  	$256,976 (Par Quarterly Reduction Amount)
	 Appraised Bulk Value
	  	$4,390,034	  	$53,537/Lot	  	Total Cost	  	$12,623,408	  	$153,944/Lot
	End of Month	  	Development & Marketing Period	  	% OF Par
Release Price	  	Reduction
Amount/
Qtr	  	Lot
Sub-Commit.	  	Maximum
Lots With
Availability	  	Maximum
Advance Rates
	  	  	  	  	  	  	LTV	  	LTC
	 21
	  	Unit Construction Continues	  	0%	  	$0	  	$2,634,004	  	82	  	60%	  	21%
	 24
	  	Unit Construction Continues; Units
Begin to Close – 04/30/2008	  	125%	  	$321,220	  	$2,312,784	  	74	  	58%	  	20%
	 27
	  	Unit Construction & Closings
Continue – 07/31/2008	  	125%	  	$321,220	  	$1,991,564	  	66	  	56%	  	20%
	 30
	  	Unit Construction & Closings
Continue – 10/31/2008	  	125%	  	$321,220	  	$1,670,344	  	58	  	54%	  	19%
	 33
	  	Unit Construction & Closings
Continue – 01/31/2009	  	125%	  	$321,220	  	$1,349,124	  	50	  	50%	  	18%
	 36
	  	Unit Construction & Closings
Continue – 04/30/2009	  	125%	  	$321,220	  	$1,027,904	  	42	  	46%	  	16%
	 39
	  	Unit Construction & Closings
Continue – 07/31/2009	  	125%	  	$321,220	  	$706,684	  	34	  	39%	  	14%
	 42
	  	Unit Construction & Closings
Continue – 10/31/2009	  	125%	  	$321,220	  	$385,464	  	26	  	28%	  	10%
	 45
	  	Unit Construction & Closings
Continue – 01/31/2010	  	150%	  	$385,464	  	$0	  	0	  	0%	  	0%

  

 SCHEDULE 2 

 SCHEDULE 3 
 REVISED MANDATORY LOT COMMITMENT REDUCTION SCHEDULE 
 (TRADITION AT ARBORETA) 
  

															
	Mandatory Lot Commitment Reduction Schedule
	Total Lots	  	53	  	Tradition at Arboreta
	Total Lot Commitment/MAA per lot	  	$9,533,848	  	$179,883.92/Lot
	Reductions Start At End Of Month >>	  	3	  	Final Quarterly Reduction At End Of Month >>	  	27
	Appraised Absorption/
Required Qtrly Takedown (75% Appr. Abs)	  	6	  	5.00	  	$899,420 (Par Quarterly Reduction Amount)
	 Appraised Bulk Value
	  	$14,667,458	  	$276,744/Lot	  	Total Cost	  	$15,615,005	  	$294,623/Lot
	End of Month	  	Development & Marketing Period	  	% OF Par
Release Price	  	Reduction
Amount/Qtr	  	Lot
Sub-Commit.	  	Maximum
Lots With
Availability	  	Maximum
Advance Rates
	  	  	  	  	  	  	LTV	  	LTC
	 0
	  	Unit Construction Begins	  	0%	  	$0	  	$9,533,848	  	53	  	65%	  	61%
	 3
	  	Unit Construction Continues 02/29/2008	  	100%	  	$899,420	  	$8,634,428	  	48	  	65%	  	61%
	 6
	  	Unit Construction Continues
05/31/2008	  	100%	  	$899,420	  	$7,735,008	  	43	  	65%	  	61%
	 9
	  	Unit Construction Continues; Units
Begin to Close – 08/31/2008	  	125%	  	$1,124,275	  	$6,610,733	  	38	  	63%	  	59%
	 12
	  	Unit Construction & Closings
Continue – 11/30/2008	  	125%	  	$1,124,275	  	$5,486,458	  	33	  	60%	  	56%
	 15
	  	Unit Construction & Closings
Continue – 02/28/2009	  	125%	  	$1,124,275	  	$4,362,183	  	28	  	56%	  	53%
	 18
	  	Unit Construction & Closings
Continue – 05/31/2009	  	125%	  	$1,124,275	  	$3,237,908	  	23	  	51%	  	48%
	 21
	  	Unit Construction & Closings
Continue – 08/31/2009	  	125%	  	$1,124,275	  	$2,113,633	  	18	  	42%	  	40%
	 24
	  	Unit Construction & Closings
Continue – 11/30/2009	  	125%	  	$1,124,275	  	$989,358	  	13	  	27%	  	26
	 27
	  	Unit Construction & Closings
Continue – 02/28/2010	  	110%	  	$989,358	  	0%	  	0	  	0%	  	0%

  

 SCHEDULE 3 

 SCHEDULE 4 
 REVISED MANDATORY LOT COMMITMENT REDUCTION SCHEDULE 
 (TRAMONTO) 
  

															
	Mandatory Lot Commitment Reduction Schedule
	Total Lots	  	49	  	Tramonto
	Total Lot Commitment/MAA per lot	  	$2,199,169	  	$44,881.00/Lot
	Reductions Start At End Of Month >>	  	3	  	Final Quarterly Reduction At End Of Month >>	  	36
	Appraised Absorption/
Required Qtrly Takedown (75% Appr. Abs)	  	15	  	12.00	  	$538,572 (Par Quarterly Reduction Amount)
	 Appraised Bulk Value
	  	$3,523,688	  	$71,912/Lot	  	Total Cost	  	$3,141,684	  	$64,116/Lot
	End of Month	  	Development & Marketing Period	  	% OF Par
Release Price	  	Reduction
Amount/
Qtr	  	Lot
Sub-Commit.	  	Maximum
Lots With
Availability	  	Maximum
Advance Rates
	  	  	  	  	  	  	LTV	  	LTC
	 27
	  	Unit Construction & Closings
Continue – 01/31/2008	  	0%	  	$0	  	$2,199,169	  	49	  	62%	  	70%
	 30
	  	Unit Construction Continues; Units
Begin to Close – 04/30/2008	  	125%	  	$673,215	  	$1,525,954	  	37	  	57%	  	64%
	 33
	  	Unit Construction & Closings
Continue – 07/31/2008	  	125%	  	$673,215	  	$852,739	  	25	  	47%	  	53%
	 36
	  	Unit Construction & Closings
Continue – 10/31/2008	  	158%	  	$852,739	  	$0	  	0	  	0%	  	0%

  

 SCHEDULE 4

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